Draft Capital Requirements Regulation (amendment) regulations 2021

John Glen Excerpts

Wednesday 15th September 2021 General Committees

[The Economic Secretary to the Treasury (John Glen)]

I beg to move,

That the Committee has considered the draft Capital Requirements Regulation (Amendment) Regulations 2021.

It is a pleasure to serve under your chairmanship, Mrs Murray. The regulations, among other things, support the implementation of the Basel III standards in the United Kingdom. This is yet another statutory instrument that I bring to the Committee, and I am delighted to do so.

I want to begin by reminding the Committee of the background to this issue. After the financial crisis, the international community came together to rectify major deficiencies in financial regulation and created new banking standards, known as the Basel III accords. As a member of the G20 the UK is committed to implementing these standards, but now we have left the EU, we have the opportunity to do so in our own way, enabling our expert regulators to apply international standards in a way that is most fitting to the UK’s individual circumstances. The instrument therefore exercises the powers contained in section 3 of the Financial Services Act 2021, to revoke elements of the UK’s capital requirements—the CRR, or capital requirements regulation—so the Prudential Regulation Authority can update the current regime to account for the Basel III standards.

Let me turn to some of the detail. The Financial Services Act restricts the ability of Ministers to only revoking those parts of the CRR that need to be updated to reflect the new Basel standards, and anything that is connected to, or consequential to, those standards. When it makes CRR rules under the new regime, the PRA is subject to an accountability framework under which it must consider the impact of its rules on a number of areas. These are: the relative standing of the UK compared to other jurisdictions, lending to the real economy and the Basel standards themselves. In addition, the PRA must consult the Treasury on the potential impacts of any rule changes on equivalence.

The instrument also contains additional EU exit-related amendments to the CRR. It makes an amendment to article 497 of the CRR, allowing for the Treasury to extend a transitional provision that allows for certain foreign central counterparties, or CCPs, to retain temporary qualifying status. Qualifying status allows UK firms to have exposures to these CCPs without being subject to higher capital requirements. This amendment will allow for the transitional period to be extended by regulations one year at a time. These extensions are required as there may be non-UK CCPs that will be unable to receive qualifying status through recognition for a prolonged period. However, the Treasury still considers it beneficial that they retain qualifying status. The Treasury will keep these arrangements under review to ensure they are fit for purpose.

Additionally, under article 391 of the CRR, the Treasury may determine that an overseas jurisdiction applies prudential requirements to the same standard as those applied in the UK and grant it equivalence. Smaller UK banks in particular benefit from that article as it allows them to lend more as a single loan to overseas firms. However, the UK’s only equivalence decision in this area is with respect to EEA member states. That is because, at the end of the transition period, the EU had not made any equivalence decisions under the article and the European Banking Authority had issued guidance allowing EU firms, including those in the UK, to use equivalence decisions under a different article—107—as a proxy for article 391 equivalence. However, this is, in effect, regulatory guidance overruling legislation.

The Government and the UK’s regulators consider that guidance inappropriate and therefore do not intend to replicate it in the UK. It is also impractical to undertake the equivalence assessments in such short timescales. The Treasury is therefore, through this statutory instrument, using section 8 powers under the European Union (Withdrawal) Act 2018 to put in place transitional arrangements. In parallel, the Treasury will seek a legislative opportunity to streamline the system by linking the equivalence regime in article 391 to that in article 107, providing certainty to firms.

The Treasury has worked closely with the PRA in drafting the instrument. We also engaged with industry throughout the process, including through a public consultation. The Government have updated their approach in line with the points raised in the consultation.

I hope I have given Members a comprehensive overview of the measure, and I urge colleagues to join me in supporting the regulations. In short, the measure will enable the implementation of Basel III—regulation that is key to the UK’s international standing. In addition, it will iron out some of the wrinkles in existing EU regulation. Together, the proposals will give UK firms certainty, and therefore help them to flourish. I commend the regulations to the Committee.

--- Later in debate ---

[John Glen]

I am grateful to the right hon. Gentleman, as ever, for his constructive scrutiny of the statutory instrument. He always provides succinct summaries of complex matters. They are often full of wisdom, and always courteous, and I am very happy to try to address the points that he made.

The right hon. Gentleman referred to the anxiety that exists in his mind concerning the Government’s intentions with respect to standards, competitiveness, what the PRA will be subject to and what we may wish to do to encourage it to succumb to such covert lobbying. As I have always tried to stress in our encounters, this Government wish to retain the highest possible standards. Of course, having regard to our situation in the global financial services industry will always be important, but we are united, in terms of the Treasury, the PRA and the FCA, on the need to hold to the highest international standards, which give us a baseline of resilience. As the right hon. Gentleman will know, the UK was extremely influential in both shaping the Basel accords and pushing for their implementation. We remain committed to their effective implementation.

As the right hon. Gentleman will know, as part of the Financial Services Act, the PRA is required to have regard to the effect of its rules on international standards, including Basel. As was demonstrated in the publicly available analysis, which I think was published in July, the PRA considers all its rules as achieving the same outcomes: a safe and sound prudential regime to the Basel standards and EU equivalent legislation.

The second issue that the right hon. Gentleman raised was around the CCPs and the transitional rollover concept. He asked about that provision. I would want to say to him that while a foreign firm or jurisdiction can express an interest in receiving equivalence or recognition, it will be for the Treasury to decide whether to initiate consideration of an EU equivalence decision for a foreign jurisdiction and the appropriate timescales. As with all equivalence decisions, the UK authorities will need to ensure that granting equivalence is compatible with the UK’s policy priorities, including those relating to the rule of law, international standards, human rights and efforts to combat money laundering.

Let me turn to the retention of that transitional status without, I think the right hon. Gentleman said, all the forms being processed. Letting that transition fall away might create disruption for the UK firms with exposures to the relevant CCPs. That is not something we would wish to have. The market access provided by qualifying central counterparty status is more limited than that provided by full recognition status, with QCCP firms unable to provide clearing services directly to UK clients. Therefore, it is appropriate that firms may continue to benefit from QCCP status while awaiting the result of their application for recognition.

On any Government intention to extend the transition indefinitely, that is not the case. The Treasury will keep those arrangements under review to ensure they are fit for purpose while a permanent solution is considered. Obviously, I am engaged in discussions with colleagues about legislation in the next Session.

May I conclude by reminding members of the Committee of the key purposes of the statutory instrument? The legislation revokes a number of provisions in the UK’s capital requirements regulations. By doing so, it will enable regulators to make rules in these areas reflecting Basel III international standards. The PRA has consulted on those rules, and in July it published a near-final version of the rules alongside an accompanying policy statement. That set out how the regulator had taken into account public policy factors set out in legislation.

I hope that the Committee has found today’s sitting informative, and that its members will join me in supporting the regulations, which I commend to the Committee.

Question put and agreed to.

Demutualisation of Liverpool Victoria

John Glen Excerpts

Wednesday 15th September 2021 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

I congratulate the hon. Member for Harrow West (Gareth Thomas) on securing the debate. He is a strong and sincere supporter of the mutuals sector, and he has regularly raised issues with me in the, I think, 44 months that I have been in post. I very much value his knowledge and insights on these matters and welcome the opportunity to discuss his concerns.

During my time as Economic Secretary to the Treasury, I have seen the clear benefits of mutuals both for the economy and for society as a whole. In essence, these businesses focus on service, and their frequently innovative nature means that they provide a unique, distinct offer to both their customers and their communities as well as a much-valued degree of service. The Government recognise those benefits, which is why, over the years, we have shown ourselves to be a supporter of the mutuals sector.

That support has manifested itself in a wide variety of ways, including, first, in engagement. We think it is vital that we understand the sector’s needs, so two years ago the Treasury held a mutuals workshop dedicated to understanding the challenges facing the sector and how they can be overcome. We have tried to take on board the points raised in that workshop, and we continued the conversation. As a result, my officials have been working hard to raise awareness of the mutuals model across Government to ensure that other Departments are equally focused on supporting it.

Secondly, we are helping the sector to be ready for the future. That is why at the Budget we committed to amending the Credit Unions Act 1979 to allow credit unions to offer a wide range of products and services. Finally, we have ensured that mutuals have also received financial support throughout the covid crisis, recognising their vital contribution to communities up and down the country. Mutuals were able to benefit from the furlough scheme and other forms of Government financial help. In addition, the Corporate Insolvency and Governance Act 2020 introduced new insolvency support mechanisms for businesses, including many in that sector.

I would now like to address the subject of this debate in more specific detail. The hon. Gentleman has set out in some detail a range of observations about what has happened over recent months. As he is aware, the sale of LV= to Bain Capital and the ultimate demutualisation of the firm is something that I have engaged with him on and discussed previously. I want to assure the House that this continues to be a priority for me. I am closely engaged on this matter, and I am in close communication with regulators and the firm itself.

However, while I am very focused and aware of the views that the hon. Gentleman holds and the concerns that he raises, I cannot intervene directly in the sale or the demutualisation of a firm. The sale’s approval is a matter for the financial services regulators and the courts, both of which are independent of Government. The hon. Gentleman has done a lot of work to trace the interactions between the firm and the regulators, and I know that they are very aware of his interest in the matter. I am sure that that is going to lead to a very rigorous process, which I think he understands and I know is under way.

Therefore, I do not think it is appropriate for me at this point to comment on the substance of that ongoing independent process, but what I can say is this. The approval process involves safeguards designed to ensure that members and policyholders are kept informed and that their interests are protected. I recognise that we are not at the end of that process yet, and the hon. Gentleman is somewhat anxious and perhaps, I may suggest, sceptical about what the final outcome will look like. But I have been reassured that the regulators are undertaking rigorous processes, as evidenced by the number of meetings that they have had, to assess the viability of the transaction and the suitability of Bain to manage an insurance business. Importantly, the statutory objectives of the regulators put policyholders’ interests, as well as consideration of the impact of the transaction on the market, at the heart of their assessment. I greatly support the regulators in their roles, and trust that they will endeavour to secure the best outcome in the interests of members and policyholders.

I recognise the points that have been raised about further demutualisations by the hon. Member for York Central (Rachael Maskell). As I mentioned earlier, I believe mutuals have a very special place in our economy, and I very much value that contribution, but ultimately any future sales, irrespective of whether the firm is a mutual, will and should be considered on a case-by-case basis, in line with the regulators’ and courts’ duties and requirements.

I recognise that, in the course of this debate this evening, some suggestions have been made about the sorts of interventions that may be appropriate to safeguard the sector. I would be very happy to meet the hon. Member for Harrow West and the hon. Member for York Central to discuss their views on this subject, but I am, as I demonstrated earlier, very much focused on helping the sector to thrive. That means continuing the conversation so we can identify how best to facilitate the growth of the sector and understand the concerns in more detail, recognising that, across the range of mutuals of different sizes and different roles in the economy, different concerns may exist.

Therefore, I hope the hon. Member for Harrow West will relay the message to the sector that my door continues to be open to it. I would like to thank both Members for their constructive comments.

[Gareth Thomas]

I have two interlinked questions, if I may. First, the Financial Conduct Authority, in its letter to the all-party group of 5 August, made it clear that it had already decided it would not review the interlinkage, or not, of the decision by LV= to convert to a company limited by guarantee and the subsequent proposal to demutualise. I recognise that the Minister cannot intervene with the regulators directly, but he can, as I understand it, because he meets with the chief executive of the FCA, seek an explanation of that decision. Secondly, if the FCA will not engage with that question sufficiently to satisfy me, could he at least ask it to publish the details of the two independent experts appointed by the board of LV= so that customer-owners can begin to make contact with them to ask them questions about what exactly the plans of LV= are?

[John Glen]

I am always ready to look at constructive suggestions and am happy to take this forward. I suspect there may be legal impediments to the publishing of some of that information, but I will certainly ask the questions and seek to relay to the hon. Gentleman the fullest answer that I am able to. I am frequently in my current role in between this place and independent regulators. It is right that our regulators are independent and I see the frustrations that exist within that, but I am happy to take forward a constructive dialogue as far as I can.

I do not think I can add much more at this point. I recognise the sincere commitment of hon. Members who have spoken to this issue, their frustration with what has happened, the apparent unnecessary nature of this transaction, given the history and the apparent change in the direction of travel with little warning, but I am clear that the regulators are very aware of their obligations to safeguard the interests of members and I look forward to the judgments coming forth in the coming weeks and months. I hope that that gives the hon. Gentleman some satisfaction on the matters he has raised this evening.

Question put and agreed to.

Money Laundering and Terrorist Financing (Amendment) (No. 2) (High-Risk Countries) Regulations 2021

John Glen Excerpts

Monday 13th September 2021 General Committees

[The Economic Secretary to the Treasury (John Glen)]

I beg to move,

That the Committee has considered the Money Laundering and Terrorist Financing (Amendment) (No. 2) (High-Risk Countries) Regulations 2021 (S.I. 2021, No. 827).

May I say what a pleasure it is to serve under your chairmanship, Sir Graham?

The Government recognise the threat that economic crime poses to the UK and are committed to combating money laundering and terrorist financing. Illicit finance causes significant social and economic cost through its links to serious and organised crime. It is a threat to our national security and risks damaging our international reputation as a fair and open rules-based economy. It also undermines the integrity and stability of our financial sector and can reduce opportunities for legitimate business in the UK. That is why the Government are focused on making the UK an inhospitable environment for illicit finance. We have taken significant action to tackle money laundering and terrorism financing and have strengthened the whole system response to economic crime.

Underpinning those efforts are the money laundering regulations—a key part of our legislative framework—that set out a number of measures that certain businesses must take to combat money laundering and terrorist financing. They include the need for businesses to identify and verify the people and organisations with whom they have a business relationship or for whom they facilitate transactions. In addition, they require that financial institutions and other regulated businesses conduct additional checks or enhanced due diligence on business relationships and transactions involving high-risk third countries that have been identified as having strategic deficiencies in their anti-money laundering and counter-terrorism financing regimes and posing a significant threat to the UK’s financial system. The statutory instrument under discussion updates the list of countries that are specified as high risk in the money laundering regulations.

At present, the UK’s list of high-risk third countries specified in the money laundering regulations mirrors that identified in February by the Financial Action Task Force, the global standard setter for anti-money laundering and counter-terrorist financing. The Financial Action Task Force carries out periodic reviews and regularly updates its list. As a result, following the conclusion of a FATF plenary in June this year, it updated its public list of jurisdictions with strategic deficiencies to reflect changing risks and circumstances in these jurisdictions and in the global economy.

This instrument will therefore amend the money laundering regulations to update the UK’s list of high-risk third countries to mirror the latest FATF public list, ensuring that the UK’s list is responsive to the latest threats emanating from high-risk countries with inadequate counter-illicit finance systems and that the UK remains at the forefront of global standards on money laundering and terrorist financing. This update is an integral part of helping to protect our national security and the UK’s international reputation, businesses and financial systems from money launderers and terrorist financiers.

I thank Members for examining this important measure that will update the UK’s high-risk third countries list. Businesses that fall under the scope of the money laundering regulations and that deal with such countries will be required to take extra security measures. This amendment will enable the money laundering regulations to continue to work as effectively as possible to protect the UK’s financial systems. It will allow the UK to continue to play its full part in the fight against economic crime and I hope that colleagues will join me in supporting it.

--- Later in debate ---

[John Glen]

I am happy to address Members’ points.

It is the Government’s view that the amendment will ensure that UK legislation remains up to date and continues to protect the financial system from the threat by jurisdictions with inadequate money laundering and terrorist financing. The amendment enables the UK to remain in line with international standards on money laundering and terrorist financing, allowing it to continue to play its full part in the fight against economic crime. I agree with the right hon. Member for Wolverhampton South East and the hon. Member for Glenrothes about the need to retain high standards in our financial services regulation—the consistent duty I have put on our regulators in conversations with them, week in, week out.

The right hon. Member for Wolverhampton South East was absolutely right when he said that, because of the size and sophisticated nature of financial services in the United Kingdom, keeping to those high standards will always be an imperative for us. He asked me to comment on the listing of Malta and Afghanistan. At the June 2021 FATF plenary, FATF collectively agreed to include Malta on its list of jurisdictions under increased monitoring. As this is one of the FATF public lists that the UK list mirrors, Malta will be added to the UK’s list of high-risk third countries. The outstanding issues that Malta must address are outlined in FATF’s publicly available statement.

The hon. Member for Glenrothes made a point about this country’s past. FATF’s rules and processes are searching, rigorous and extensive. The British Government receive extensive lobbying on these matters but we defer to the rigour of the process, no matter how uncomfortable it might be given the strong relationships we might otherwise have. Part of today’s upgrading following the June decisions goes ahead of where the EU is on a number of these issues, and I am pleased that we are applying the highest standards.

The right hon. Member for Wolverhampton South East made a number of points about Afghanistan and the challenges that exist. Afghanistan is not currently identified on any of FATF’s public lists, but it is important to note that the money laundering regulations require enhanced due diligence in a range of situations that present a high risk of money laundering or terrorist financing, not just where a transaction or business relationship involves a country that is listed as high risk. When assessing whether there is a high risk of money laundering or terrorist financing, the regulated sector must take a number of factors into consideration, including geographical risk where countries have been identified by credible sources and alerts from supervisory and regulatory bodies.

There are at present various sanctions in place in relation to Afghanistan that include members of the Taliban. Targeted sanctions impose an asset freeze, including making directly or indirectly available funds or economic resources to or for the benefit of designated individuals or entities. Under the UN’s existing Afghanistan sanctions regime, 135 designated individuals are linked to the Taliban or the Haqqani network—which as Members will know is a UK-designated and proscribed organisation closely linked to the Taliban—and four Afghan Hawala businesses. Several other designated groups and individuals with links or possible links to the Taliban are also designated under the UN al-Qaeda/Daesh regime, UNSCR 1267.

As anti-money laundering and counter-terrorism financing supervisors, the Financial Conduct Authority and HMRC reminded obliged firms in their recent alerts about potential financial crime risks from Afghanistan and about their obligations to ensure that they appropriately monitor and assess transactions with Afghanistan to mitigate the risk of their firms being exploited for money laundering or terrorist financing purposes and to implement sanctions screening. Similarly, the Office of Financial Sanctions Implementation, which sits within the Treasury, issued an alert reminding businesses that UN sanctions are already in place against individuals and entities associated with the Taliban. The alert advised businesses to exercise caution given the changing environment and reminded them of the continued existing obligations to carry out customer due diligence and implement sanction screening.

FATF will continue to analyse countries at risk and will likely look at those matters during its next plenary, which I believe is in October. The United Kingdom will play an active part in that conversation.

[Mr McFadden]

If we were to think of a country at greatest risk of being used for terrorist financing, Afghanistan and its new Government would be high in our thoughts. The Minister tells the Committee that the list is based on FATF’s work. I understand that, but presumably the Government have the power to go beyond FATF and say, “We think Afghanistan should be on the list.” Is there anything to stop the Government adding Afghanistan to the list, according to their own timetable, before FATF looks at the issue again?

[John Glen]

The purpose of this statutory instrument is to update according to the last assessment. We would not want, as a response to immediate events and without analysis or rigour, to add additional countries. I have explained at some length the considerable sanctions regime against proscribed individuals and the upgrading of the advice on its obligations to the regulated sector from HMRC and the FCA. Other jurisdictions such as the EU are not even upgraded to the list that I hope the Committee will agree to today. We do not rule anything out in the future, but we believe that FATF is rigorous. Indeed, the UK experienced rigorous analysis in 2018. We stand by the assessment and will see what it will do in October.

The hon. Member for Glenrothes mentioned wider issues with Scottish limited partnerships. The registration numbers thereof have diminished significantly recently, but as this is a BEIS competence I hope he will not mind my writing to him on it. I hope that satisfies the Committee.

Question put and agreed to.

Pilot No-Interest Loans Schemes: Contingent Liability

John Glen Excerpts

Tuesday 7th September 2021 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

It is normal practice when a Government Department proposes to undertake a contingent liability in excess of £300,000 and for which there is no statutory authority, for the Minister concerned to present a departmental minute to Parliament, giving particulars of the liability created and explaining the circumstances.



I wish to notify Parliament of a contingent liability that has been created by the Government from the introduction of the pilot No-Interest Loans Scheme. The pilot No-Interest Loans Scheme was announced at the Budget on 3 March 2021. The loans will support consumers in vulnerable circumstances who would benefit from affordable credit to meet unexpected costs and will provide an alternative to relying on high-cost credit. Fair4All Finance, who were founded to support the financial wellbeing of people in vulnerable circumstances, have been appointed to run the pilot and will enter contracts with lenders to deliver the loans, including to provide a partial guarantee against default losses. To facilitate the lending to consumers in vulnerable circumstances, HM Treasury will reimburse Fair4All Finance for eligible default losses they incur under eligible guarantees.



HM Treasury will reimburse Fair4All Finance for up to 80% of eligible default losses incurred as part of the pilot. HM Treasury will reimburse losses on loans made from 22 September 2021, but the liability will not be incurred until Fair4All Finance enter guarantees with eligible lenders and defaults occur, which is not expected until financial year 2022-23.



The maximum amount to be paid under the contingent liability is £10 million, with expected payments totalling £1.8 million. HM Treasury will reimburse Fair4All Finance for eligible default losses on loans initiated after 22 September 2021 and will stop reimbursing costs by 31 March 2026. If the liability is called, provision for any payment will be sought through the normal supply procedure.



It is normal that any contingent liabilities should not be incurred until 14 sitting days after Parliament has been notified of the Government’s intention to incur a contingent liability. There is an exception in cases of special urgency. This is one such occasion.



In order to make timely progress with this policy, it is important that lenders have the certainty of the HM Treasury’s funding commitment to the pilot in good time before the November and December periods, which for many social lenders is the busiest time of the year. As such, HM Treasury’s grant agreement with Fair4All Finance has been signed to enable contract negotiations with lenders to commence.

I note that HM Treasury’s intention to develop such a pilot has been in the public domain for some time, and that the pilot has received broad support from across both Houses of Parliament since the Government funding was announced at Budget 2021. Given this support I hope the House is in agreement with my assessment that to delay signing the aforementioned agreement until the House returned would have been inappropriate and to the detriment of the beneficiaries under this scheme.



I will also lay a minute today on this matter.

[HCWS267]

Government Shareholding in NatWest Group

John Glen Excerpts

Monday 6th September 2021 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

I can today inform the House that on 22 July 2021 the Government announced a trading plan to sell part of the Government’s shareholding in NatWest Group (NWG, formerly Royal Bank of Scotland, RBS). This is a further step forward in the Government’s plan to return NWG to the private sector.

Rationale

It is Government policy that where a Government asset no longer serves a public policy purpose the Government may choose to sell that asset, subject to being able to achieve value for money. This frees up public resource which can be deployed to achieve other public policy objectives.

The Government are committed to returning NWG to full private ownership, now that the original policy objective for the intervention in NWG—to preserve financial and economic stability at a time of crisis—has long been achieved. The Government only conduct sales of NWG shares when it represents value for money to do so and market conditions allow. The announcement of this trading plan represents a further step forward for Government in exiting the assets acquired as a result of the 2007 to 2008 financial crisis.

Format and timing

The Government, supported by advice from UK Government Investments (UKGI), concluded that selling shares by way of an on-market trading plan will deliver value for money.

A trading plan involves selling shares in the market through an appointed broker in an orderly way at market value over the duration of the plan. Trading plans are an established method of returning Government-owned shares to private ownership, while protecting value for the taxpayer. This method was used in the sell-down of the Government’s stake in Lloyds Banking Group (in that case, from a lower starting point in terms of the Government’s percentage ownership).

This is the first use of a trading plan for disposals of NWG shares by the Government. This follows previous disposals of NWG shares via accelerated book builds in August 2015 and June 2018, a directed buyback selling shares to the company in March 2021, and a further accelerated bookbuild in May 2021. UKGI and HMT will keep other disposal options open, including by way of further directed buybacks and/or accelerated bookbuilds. The decision to launch the trading plan does not preclude the Government from using other disposal options to execute future transactions that achieve value for money for taxpayers, including during the term of the trading plan.

The trading plan commenced trading no earlier than 12 August and will run for 12 months, terminating no later than 11 August 2022. Shares will only be sold at a price that represents fair value and delivers value for money for the taxpayer. The final number of shares sold will depend on, amongst other factors, the share price and market conditions throughout the duration of the trading plan.

The Government will provide Parliament with further details at the end of the term of the trading plan.

[HCWS259]

Cash Ratio Deposit Scheme: Review

John Glen Excerpts

Tuesday 20th July 2021 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

Cash Ratio Deposits (CRDs) are non-interest bearing assets deposited with the Bank of England (“the Bank”) by banks and building societies. They are invested in gilts by the Bank and the income is used to finance its policy functions, in particular its efforts to secure price stability and the stability of the financial system in general, from which these institutions are key beneficiaries.

The CRD scheme was extended to include building societies, and was placed on a statutory basis, when the Bank of England Act became law in 1998. At the last review, the Government committed to review the scheme within five years. The last review was in 2018 and resulted in the CRD ratio being moved from a single fixed ratio, to a variable ratio indexed to gilt yields, reindexing the ratio to prevailing gilt yields every six months. The Treasury, working closely with the Bank, will now begin the next review.

The review will include an assessment of the detailed arrangements of the scheme as well as the continuing suitability of the scheme itself compared to alternative sources of funding. It will also address the impact of the scheme on eligible institutions and involve a public consultation.

[HCWS211]

Rural Banking Services

John Glen Excerpts

Tuesday 20th July 2021 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship this morning, Mr Gray, and I commend my hon. Friend the Member for Brecon and Radnorshire (Fay Jones) on securing this debate and on the eloquent way in which she set out a whole range of issues concerning her constituents. I know that she has deep first-hand experience of rural affairs, given her prior role working for the National Farmers Union before she came to this place, and she spoke very clearly about the significance of bank branches for many in rural areas across Wales, England, and indeed Scotland too. I also listened very carefully to the three interventions from the hon. Members for Pontypridd (Alex Davies-Jones) and for Strangford (Jim Shannon) and my hon. Friend the Member for Aberconwy (Robin Millar), and I am keen to address those in my response.

From my first-hand experience growing up in rural Wiltshire, as part of a family running a very small business, I know the significance of bank branches and the central role that they have in the community. However, I also have to recognise that the world that we live in today is very different from the one of a few decades ago. Technological progress means that more consumers and businesses are opting for digital payments and banking, and last year’s figures from UK Finance show that around seven in 10 adults in this country used online banking and eight in 10 used contactless payments. Although cash represented almost a fifth of the total number of payments, this was a reduction from 56% a decade earlier in 2009, so while the longer-term impact of the pandemic on banking is not yet absolutely clear, the switch to those digital methods is likely to have been accelerated by coronavirus. Times are changing and have clearly changed, and digital technology is transforming banking just like ATMs did in the 1960s.

None the less, as we have heard today, bank branches still matter a great deal to many people, and permanent branch closures can be a source of real dismay to communities across the country. Although closures can be upsetting, they are commercial matters and the Government cannot intervene. Indeed, one could argue that the UK’s financial services sector is among the most competitive and productive in the world precisely because it has the flexibility to respond to market changes.

It is also crucial that the impact of branch closures is understood, considered and, where possible, mitigated so that all consumers across the country can continue to access over-the-counter banking services as they choose. As has been mentioned, since 2017 the major high street banks have been signed up to the access to banking standard, which commits banks to ensuring that customers are well informed about branch closures and the reasons behind them, and that customers have options for continued access to banking services, including specialist assistance for those who need more help. That is not some passive intervention. The operation of the standard is monitored and enforced by the independent Lending Standards Board, which holds banks that close branches accountable for their treatment of customers. That means monitoring to see whether they help individual customers to make the transfer to using the Post Office or other solutions.

Last September, banks’ responsibilities around closures were further clarified by the Financial Conduct Authority when it published guidance setting out its expectations of firms that decide to reduce their physical branches or the number of free-to-use ATMs. Under that guidance, which seeks to ensure that customers are treated fairly, banks are expected to consider the impact of planned closures on customers’ everyday banking and cash access needs. In addition, banks should consider alternative access arrangements. On that last point, it is my understanding that within a short distance of the Llandrindod Wells Barclays, which my hon. Friend the Member for Brecon and Radnorshire mentioned, there are two post offices and two free ATMs. In addition, I note that Lloyds and NatWest provide fortnightly mobile bank branches throughout the constituency.

My hon. Friend quite rightly highlighted the great significance of cash to constituents, and the Government recognise that we have to address that need and the ongoing importance of cash to millions of people, particularly those in vulnerable groups—often the elderly and the poorest. I am therefore glad that LINK has already said that it will protect the broad geographic spread of free-to-use ATMs. It is being held to account against those commitments by the Payment Systems Regulator.

As my hon. Friend acknowledged, the Government are committed to legislating to protect access to cash for those who need it while ensuring that the UK’s cash infrastructure is sustainable. Clearly, the way it is funded and the way the wholesale system works has to evolve to reflect the changing usage pattern. That is why we brought new laws into effect at the end of June through the Financial Services Act 2021 to support the widespread offering of cashback without a purchase by shops and other businesses. That exciting development unlocks the potential for cashback without a purchase. It will provide a valuable facility for cash users and will play a major role in the UK’s cash infrastructure. As my hon. Friend highlighted, cashback without a purchase has been trialled in Hay-on-Wye—clearly a community with a strong independent streak, from what she said—for some months under the community access to cash pilots.

In addition, earlier this month we published a consultation outlining broader legislative proposals to protect access to cash. Those proposals seek to ensure that people need to travel only a reasonable distance to pay in or take out cash, and that the right regulatory oversight for cash access is in place for the future. My hon. Friend made a point about the rurality of her distinctive and distinguished constituency, with respect to its geographical size. This is obviously a matter that we must consider carefully as we move forward with these proposals.

Together, these measures will support the use of cash and help local businesses to continue accepting it by ensuring reasonable access to cash depositing facilities for small and medium-sized enterprises. The Post Office is also playing a key role; the Post Office banking framework allows 95% of businesses and 99% of personal banking customers to deposit cheques, check their balances and withdraw and deposit cash, across a network of 11,500 post office branches across the country. The Post Office is also required to ensure that 95% of the total UK rural population is within three miles of an outlet. I am pleased to tell hon. Members that the Post Office is trialling bank hubs as part of the eight community access to cash pilots around the country that I mentioned earlier. Rochford in Essex and Cambuslang in south Lanarkshire are benefiting from those shared branches. They are a significant innovation from the business hubs that were on offer a few years ago, and I am very pleased with the direction of travel in that area. The hubs will offer access to face-to-face community banking services provided by the banks with the most customers in each area. In addition, Hay-on-Wye’s post office is being refurbished to better support banking services, as part of the eight pilots. I look forward to learning lessons from the pilots and to the future industry models for supporting access to cash that they will help to inform.

A final point, which has been raised, is that there is a need to improve mobile and broadband coverage in rural areas, to make the immense benefits and opportunities of online products open to all. That is why the Government remain committed to delivering UK-wide gigabit connectivity as soon as possible, with £5 billion to support roll-out in the hardest to reach areas. As the Prime Minister mentioned in his levelling-up speech last week, we have made great progress. By the end of this year, 60% of the country will have a gigabit connection. We are working with industry to target a minimum of 85% giga-capable coverage in just four years in 2025. We will seek to accelerate roll-out further to get as close to 100% as possible.

However, while 4G coverage continues to improve in rural areas, admittedly it is not yet as good as in towns and cities—again, Members rightly raised that. As a result, the Government are providing £510 million for the shared rural network. Mobile operators will contribute an additional £532 million as part of this deal, which will extend high-quality 4G mobile coverage to 95% of the UK by 2025. We are also focused on removing the practical barriers that stand in the way of our broadband and mobile coverage targets, through our barrier busting task force. We are looking at the difficult challenges in some communities, many of which are in rural areas, to try to make a real difference on the ground.

While technology is continually changing, the principles that guide the Government’s approach to banking services remain entirely consistent. I have been in this role now for more than three and a half years, and I continue to work with banks, the Post Office and industry stakeholders to try to find practical solutions. We are working to ensure that all consumers, in both rural and urban areas, can access the services they need. We are committed to legislating to protect access to cash for those who need it, and to maintaining the sustainable cash infrastructure that the country needs. We are determined to help the whole country benefit from better broadband and mobile coverage, so that everyone who wishes to use digital and online services can do so.

I will continue work with colleagues across the House, and with my hon. Friend, on these important matters in the coming weeks and months. I hope that that is a reasonable appraisal of and response to the issues that she rightly raised this morning. I am happy to continue correspondence with all Members, because I know that this is something that concerns our constituents.

Question put and agreed to.

Covid-19: Household Debt

John Glen Excerpts

Thursday 8th July 2021 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate the hon. Member for Makerfield (Yvonne Fovargue) and my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) on securing this debate. I know that both Members care a great deal about the question of how best to protect the personal finances of the most vulnerable. They have made many valuable contributions in Parliament on this matter, including through the hon. Lady’s role as chair of the all-party parliamentary group on debt and personal finance and my hon. Friend’s Local Welfare Assistance Provision (Review) Bill, which has been mentioned today.

I thank all Members who have contributed this afternoon for their deeply thoughtful and considered speeches, especially my hon. Friend the Member for South West Bedfordshire (Andrew Selous). Our thinking may diverge in some areas, but I believe that there is a great degree of commonality between us. We have a shared desire to tackle problem debt and a shared understanding that this complex issue cannot be wished away with quick fixes, much as we might like it to be. We also have a shared recognition that we must tackle this issue strategically. As a number of Members highlighted this afternoon, the covid-19 pandemic has meant that action in this area is required now more than ever before.

The Government have responded to the crisis with one of the most comprehensive economic plans in the world. I reject the assertion that that somehow means that there is a degree of complacency: that is not the case. With the furlough scheme, the self-employed income support schemes and substantial welfare support, including the £20 universal credit uplift, a suspension of the universal credit minimum floor and an increase to local housing allowance rates, the Government have sought to make a range of interventions across society. I believe that that plan is working.

We also recognise that even when the economy bounces back, and there are very encouraging signs in that direction, there will still be people living in fear of a knock from a debt collector or another payment demand. That is why we have introduced the numerous policies that have been mentioned this afternoon. I would like to respond to Members’ points about the policies that we have introduced to help people escape debt. As has been highlighted today, we are maintaining record levels of funding for free debt advice in England through the Money and Pensions Service this year, with a budget of £96.4 million. I recognise that there is still some uncertainty about the nature of that demand as people’s situations become clearer, but that includes funding for the Money Adviser Network pilots, which simplify access to debt advice. I am pleased to say that more than 40 different creditor organisations are now signed up, including HM Revenue and Customs.

I recognise hon. Members’ concerns about the complexity of tax debts, but consumers referred via the network will first have a conversation with an HMRC adviser, which should minimise the risk of misunderstanding over what is owed. The Money and Pensions Service budget also includes funding for the administration of debt relief orders. A number of colleagues have raised that this afternoon. We know that DROs can be an important solution for some, which is why we worked closely with the Insolvency Service to raise the monetary eligibility limits for DROs from the end of last month, a step that will help more people take advantage of this valuable option.

I recognise that some Members would like the Government to review the £90 DRO fee, as the Woolard review recommended earlier this year. I acknowledge those concerns but the Government believe that further changes to DROs should not be considered in isolation. A number of Members have made the point that we need joined-up solutions, so we will undertake a wider consultation on the personal insolvency framework. We will in due course launch a call for evidence to help us gain a deeper understanding of the situation.

I want to talk about Breathing Space. The steps we have taken are significant, because we recognise that the barrage of letters, calls and bills can be overwhelming, leaving borrowers unable to tackle what they owe. We launched the Breathing Space scheme on 4 May, just two months ago, whereby lenders agree to hold off fees and payment requests for 60 days. That relieves the pressures on borrowers and gives them time to tackle their finances with the support of a qualified debt adviser.

I will address the point, made by several Members, about whether 60 days is long enough. We believe that that period finds the right balance between debt advice, clients’ interests and their creditors’ rights. It has only been there for two months. However, we should also recognise that greater flexibility is built into the system for those experiencing mental health crises, reflecting the nature of the treatment and the challenges that might arise in supporting those clients. We will use a similar model of respite from bills and demands for our statutory debt repayment plan, which is currently being developed to work alongside the Breathing Space scheme. Under the plan, people struggling with problem debt will enter into formal agreements with creditors to repay their debts over a more manageable timeframe. Our aim is to lay legislation at the end of next year and introduce the scheme thereafter in 2024.

As my hon. Friend the Member for Blackpool North and Cleveleys so aptly put it, debt should not mean destitution. Income that could be spent on essential items, such as cookers or washing machines, or that could build savings, should not be swallowed up by sky-high interest rates. Fair and affordable credit should be available to all those who need it. I will turn to our work in this area. As has been highlighted, at the Budget we announced plans to provide up to £3.8 million to work on a pilot for no-interest loan schemes. I care passionately about this area, and I think it could make a real difference to many vulnerable people’s lives.

I note my hon. Friend’s comments about a cut and paste from Australia. He is right that we can learn a lot from the equivalent Australian scheme, especially in terms of partnership. Their scheme has been so successful because hundreds of socially minded organisations have played their part alongside the Government. We hope to follow that model and develop a scheme that is sustainable and properly supports vulnerable customers. I hear the urgency around that, and indeed I spoke to my officials just yesterday about securing an update on it in the coming days. Our next step is to appoint a delivery organisation with suitable expertise. Further details will be announced soon.

My hon. Friend is also correct to point out that greater market diversity is critical if we are to achieve our goals in this area. That is why we have used a significant part of the £96 million dormant assets scheme—money that would otherwise have remained idle—to boost financial inclusion. We have also committed to legislate to enable credit unions in Great Britain to offer a wider range of products and services; my hon. Friend the Member for Barrow and Furness (Simon Fell) mentioned his involvement in a credit union. There are, I think, 411 credit unions across the country, of wide and varying expertise. We have worked closely with the Association of British Credit Unions Ltd, one of the significant trade bodies for credit unions, to develop that approach. While legislation will play an important part in widening access to affordable credit, innovation is also key, as some Members picked up on. That is why, in this year’s Budget, we announced a number of actions in response to the independent Ron Kalifa review into FinTech, including measures to make it easier for firms to attract staff and develop new concepts.

I will make a final point on two other issues that I know are of real interest to contributors this afternoon. First, it is true that buy-now, pay-later agreements can be a helpful way of managing finance, but we need to make sure that consumers are protected. As we indicated during the passage of the Financial Services Act 2021 earlier this year, we will bring buy-now, pay-later under regulation, as the Woolard review recommended. However, any future regulation must be proportionate so as not to fundamentally damage those products that are innovative and low cost. There is a distinction between smoothing lumpy expenditures and multiple, unsustainable deferred payments. We must get that right, but I recognise the urgency around it.

I appreciate the positive words about our recent “access to cash” consultation. I assure Members that the Treasury is working closely with the private sector—indeed, I had meetings just this morning—to ensure that we get that right, and that cash services are provided for people in an environment where the use of cash is diminishing significantly.

I reiterate the acknowledgment that there is a real desire to provide urgent help to those who are dealing with significant debts. I share that strength of feeling, as I hope my track record in this role demonstrates. It is vital that these policies improve the lives of as many people as possible, so I welcome the range of speeches this afternoon and the constructive spirit that was relayed in many of them. I look forward to further collaboration to deepen and improve our interventions in this area.

Draft Bank of England Act 1998 (Macro-Prudential Measures) (Amendment) Order 2021

John Glen Excerpts

Tuesday 6th July 2021 General Committees

[The Chair]

Before we begin, I would like to remind Members to observe social distancing and only sit in places that are clearly marked. I remind Members that Mr Speaker has stated that masks must be warn in Committee. Hansard colleagues would be most grateful if Members could send their speaking notes to [e-mail].

[The Economic Secretary to the Treasury (John Glen)]

I beg to move,

That the Committee has considered the draft Bank of England Act 1998 (Macro-prudential Measures) (Amendment) Order 2021.

May I say what a pleasure it is to serve under your chairmanship, Mr Efford? Since the financial crisis, the Government have implemented significant reforms to address the problems of the past and make the financial sector safer and more stable. The key element of those reforms was establishing the Financial Policy Committee, the FPC, which is responsible for identifying, monitoring and addressing risks to the financial system as a whole. The FPC addresses macro-prudential risks through its powers to issue recommendations and, importantly, directions to the Prudential Regulatory Authority, the PRA, and the Financial Conduct Authority, the FCA.

Successive Governments have legislated to provide the FPC with the powers of direction it needs to address risks to financial stability. Through those existing powers, the FPC can ensure that firms are not allowed to take on excessive levels of leverage, effectively tackle systemic risks in the UK housing market and vary firms’ capital requirements against exposures to specific sectors over time.

This statutory instrument amends the existing powers of direction granted to the FPC by Parliament to ensure that they continue to operate effectively given changes that have been made to the wider prudential regime since they were first introduced.

The Financial Services Act 2021 represents a major milestone in shaping a regulatory framework for UK financial services outside of the EU. It enhances the competitiveness of the sector and ensures it continues to deliver for UK consumers and businesses. The Act extended the powers for the PRA to make rules that apply to holding companies for the purposes of prudential regulation. Accordingly, the Act granted the FPC the ability to make directions or recommendations that relate to holding companies, ensuring a coherent regime under which holding companies become responsible for meeting prudential requirements.

Consistent with those changes, the instrument amends the FPC’s existing powers of direction where necessary, so that they can also be applied in relation to holding companies. In addition, the Government have stated their intention to move the detail of the leverage ratio framework exclusively into rules made by the PRA using powers introduced by the Financial Services Act 2021.

The leverage ratio is intended to be a broadly risk-insensitive measure of a bank or investment firm’s level of leverage and seeks to provide an important complement to the risk-based capital regime. This instrument, therefore, amends the FPC’s powers of direction over the leverage ratio so that the method for measuring a bank’s exposures when calculating the leverage ratio is defined by reference to rules made by the PRA. This method will be subject to any specifications made by the FPC when it issues a direction in relation to leverage.

For example, the FPC currently recommends that the PRA excludes central bank reserves from banks’ exposures for leverage purposes, to ensure that macro-prudential policy does not impede the smooth transition of monetary policy. Under this SI it would instead be able to direct the PRA to make such an exclusion.

The Treasury has worked closely with the Bank of England to prepare this instrument. In accordance with our statutory obligations, officials have consulted the FPC, which agreed with the approach being taken. We have also engaged with the financial services industry on the contents of the SI.

In conclusion, the SI is necessary to ensure that the FPC’s existing macro-prudential tools continue to operate effectively given changes that have been made to the wider prudential regime since they were first introduced. I commend the order to the Committee.

--- Later in debate ---

[John Glen]

As ever, I thank the right hon. Gentleman for his questions. He referenced the leverage framework, on which I will go into some detail in answering his second and third questions.

It is the Government’s view that this instrument is necessary to ensure that the existing macro-prudential tools that the FPC has continue to operate effectively in the light of the changes that we have made in that wider prudential regime. In so far as all those changes are consequential of decisions made five years ago, I suppose that there is a tangential link, but it is not a direct causal relationship.

The right hon. Gentleman also asked about the leverage framework. It may be helpful to the Committee if I set out that that leverage ratio is an indicator of a firm’s solvency relating to its capital resources and assets and, unlike the risk-weighted capital framework, a leverage ratio does not seek to estimate the relative riskiness of assets. The purpose of the leverage ratio requirement, alongside risk-weighted capital requirements, is to guard against the danger that the firm’s models or regulatory requirements fail to reflect the current riskiness of its assets. Currently, the leverage ratio framework requires that major banks and building societies satisfy a minimum tier 1 leverage ratio of 3.25% on a measure of exposures that excludes central bank reserves, along with various buffers that relate to those in the risk-weighted capital framework. Separately, the PRA also maintains a supervisory expectation that all firms maintain a minimum leverage ratio.

The FPC and PRA have undertaken a review of the UK leverage ratio framework in the light of the finalised international standards. The Bank published a consultation on the outcome of that review on 29 June and there are three main proposals incorporated in the FPC’s consultation.

The first is the level. The proposal is to keep the existing leverage ratio framework broadly unchanged for UK consolidated groups of major UK banks, apart from implementing the Basel 3.1 changes.

The second is around scope—to extend the framework to UK banks, building societies, investment firms with significant non-UK assets and, where relevant, certain holding companies, which reflects the importance that such firms have for the functioning of the UK financial market and that the Basel standards require the leverage ratio to be applied to internationally active banks. The PRA propose to extend the leverage ratio of firms with non-UK assets of at least £10 billion, which will capture the larger, non-ringfenced banks and international broker dealers, including Goldman Sachs, JP Morgan and Morgan Stanley.

The third element is the level of the application—the leverage ratio framework would generally be extended at the individual level, except where a relevant firm is subject to a requirement on the basis of its consolidated situation. The PRA would also have discretion to allow a sub-consolidated requirement, rather than an individual one, to be applied in certain circumstances.

The Bank believes that the extension of the leverage ratio framework to internationally active firms would only result in modest additional costs for firms, which reflects that, for many firms, their risk-weighted capital requirements remain more binding than their leverage ratio requirements, firms typically hold management buffers above their capital requirements or they are part of wider groups.

In addition, the PRA has proposed other less significant changes, which reflect updated Basel standards relating to the leverage exposure measure used for calculating the ratio, and reporting and disclosure requirements, aligning with the Basel III standards to ensure that the UK remains consistent with transparency requirements in other jurisdictions.

The review of the leverage ratio framework took place in the light of those revised Basel standards. They require the leverage ratio to be applied to internationally active banks and therefore the main change being proposed to the framework moves the UK closer to international standards.

If the consultation proposals are implemented, the FPC will argue that the UK leverage ratio framework would be equivalent to Basel standards on an outcomes basis—indeed, in some areas, super-equivalent. For example, the FPC requires the leverage ratio to be met with a higher quality of capital than the Basel framework and includes some buffers that are not mandated by Basel. However, the UK framework would potentially be sub-equivalent to Basel on a line-by-line basis, as, for instance, the FPC framework does not put restrictions on distribution —for example, the paying of dividends—if a firm breaches its leverage ratio requirements. It also has a lower leverage buffer for globally systemic important banks.

There has been little reaction to these measures at the moment, but we will continue to monitor that. These are obviously complex matters that the Treasury keeps under close review. The provisions essentially ensure that we have absolute alignment of the FPC’s responsibilities and discretions to the new environment that we passed in the 2021 Act.

I hope that addresses the questions that have been raised—I am happy to give way to the right hon. Gentleman if not.

[Mr McFadden]

I thank the Minister for that explanation. Does the instrument and what it does on excluding the Bank of England balances make any difference to what he has just outlined and what the leverage ratio is? I think the answer is no.

--- Later in debate ---

[John Glen]

No.

[Mr McFadden]

I want to press the Minister a bit on this. Does the Government have a view on these capital requirements that is any different outside the EU from when we were in the EU?

[John Glen]

I confirm to the right hon. Gentleman that we do not. Though we are outside the capital requirements regime of the EU, our objective is to align to the highest global standards—we will just do that in a way that reflects the nuances of our banking system. We will always maintain the highest possible standards. Indeed, our international reputation relies on it.

I hope that the Committee has found my observations helpful to some degree and will be able to support the order.

Question put and agreed to.

Financial Services Consultation

John Glen Excerpts

Thursday 1st July 2021 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

The Government are today publishing the “Access to Cash: Consultation” on legislative proposals to protect access to cash. Our society and economy are embracing the transition to a more digital world and as part of this the transition towards digital payments brings many opportunities, including the opportunity for faster and cheaper payments. None the less, cash remains an essential payment mechanism for many people and businesses across the United Kingdom.

The Government therefore committed at March Budget 2020 to bring forward legislation to protect access to cash and ensure that the UK’s cash infrastructure is sustainable long term. The Government support and welcome innovation in payments; this is an area where the UK is at the cutting edge globally, and we wish to see that continue. The Government’s aim in protecting access to cash is consistent with this approach and seeks to ensure continued choice in payments solutions for all parts of the UK, and for people that rely on more traditional options.

In October 2020, the Treasury published a call for evidence, which sought views on the key considerations associated with cash access. The responses demonstrated strong and broad support for Government intervention to protect access to cash, and the Treasury is publishing a summary of responses to the call for evidence today.

Furthermore, the Government took action to make legislative changes to support the widespread offering of cashback without a purchase by shops and other businesses as part of the Financial Services Act 2021. Cashback has the potential to be a valuable facility to cash users, and play an important role in the evolution of the UK’s cash infrastructure.

The access to cash consultation is the next step to progress our commitment to legislate to protect access to cash.

The consultation sets out proposals for legislation to ensure that people and businesses can continue to make cash withdrawals and deposits within a reasonable distance. This will help to ensure that the cash system continues to meet the needs of businesses and consumers and that the UK’s cash infrastructure is sustainable in the long term.

To achieve this, the consultation seeks views in three key areas:

Geographic access requirements for providing access to cash withdrawals and deposits

Designation of firms to meet requirements to provide access

Regulatory oversight, including proposals to ensure the FCA has appropriate powers and responsibilities to hold firms to account to meet requirements

The Government’s proposals for consultation seek to ensure a stable and resilient solution for cash access in the long term, where large current account providers are obliged to ensure their customers can access key cash services alongside new and convenient digital payments solutions. The decline in cash usage is a trend that is occurring in many countries across the world. The Government’s proposed approach is in line with international precedent. For example, Sweden, is one of the most advanced countries in terms of declining cash usage and it has placed legislative geographic access requirements for deposit and withdrawal facilities on its largest banks.

The consultation will be published on gov.uk https://www.gov.uk/government/consultations/access-to-cash-consultation and will run for 12 weeks, closing on 23 September 2021.

Today’s publication helps to ensure that the financial system supports the real economy and delivers for businesses and consumers. As my right hon. Friend the Chancellor set out at Mansion House today, the Government are taking action to deliver on our vision for a world-leading financial services sector, which includes this consultation. It is important that our financial services sector is open, green, technologically advanced and globally competitive and acts in the interests of our communities and citizens, creating jobs, supporting businesses, and powering growth across all of the UK.

[HCWS146]