Financial Services Bill

Lord Duncan of Springbank Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 24th February 2021 Grand Committee

I have spoken at length, but I hope that what I have said has been helpful in setting out the Government’s position on these important issues. In particular, let there be no room for doubt that the Government take the question of parliamentary accountability in financial services rule-making very seriously. The noble Lord, Lord Eatwell, invited me to muse on what might be an appropriate set of scrutiny arrangements. It is the Government’s view, I say again, that the Bill allows for proper parliamentary scrutiny, and on that basis I ask my noble friend to withdraw her amendment and for the others in the group not to be moved. Having said that, I say to all noble Lords who have spoken in this debate that I recognise the strength of feeling expressed and I am very happy to continue this conversation with noble Lords between now and Report.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

I have received a single request to speak after the Minister; I call the noble Lord, Lord Holmes of Richmond.

[Lord Holmes of Richmond (Con) [V]]

My Lords, I thank the Minister for his very clear and thoughtful response. I have three brief questions for clarification. First, what plans, if any, are there for a Financial Services (No. 2) Bill? Any information on that would be helpful to the deliberations of the Committee today, and to the approaches noble Lords may choose to take as we move through further stages of the Bill.

Secondly, will he say what the Government’s position is on the timeliness of such scrutiny? Does it err more towards rear-view rather than real-time? Thirdly, in the light of the debate that we have just had, will he consider discussions potentially to lead to government amendments coming forward on Report? I think that noble Lords would agree that, on scrutiny and accountability, if the Bill is passed as currently drafted that would be at least somewhat unfortunate.

Financial Services Bill

Lord Duncan of Springbank Excerpts

Committee stage & Lords Hansard
Wednesday 3rd March 2021 Grand Committee

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

I call the next speaker, the noble Lord, Lord Rooker.

[Lord Lucas (Con) [V]]

My Lords, I am still going—I have a number of other amendments. Is the Committee not hearing me?

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Please continue—sorry. It was a pregnant pause.

[Lord Lucas (Con) [V]]

Amendment 62 looks at joint debt situations, for instance between a wealthy husband and an impoverished wife where it is the wife who has the breathing space moratorium. Under those circumstances, it is not obvious that the wealthy husband should have the benefit. The amendment therefore asks whether, under some circumstances, the moratorium should not apply to all parties to a debt.

Amendments 63 and 64 are really just opportunities to ask the Government whether this scheme is ready to go. A lot of pressure has been placed on the Insolvency Service and the courts in the course of Covid. Are we actually in a position to launch a working system? If not, should there not be some arrangement to allow delay to ensure that, when the launch comes, it is successful?

Amendment 65 looks at situations where a debtor gets the benefit of a breathing space but then just does nothing and does not engage with the breathing space process in any way. It asks: should there not, under those circumstances, be some incentive—something that the debtor loses by not engaging with the process?

Amendment 66 looks at the situation of a creditor that has taken its debt to the point of commencing legal action and then faces a breathing space process. That is fine, but should not the position that the creditor has got into be finalised so that things can be picked up again afterwards if they need to be, rather than having to be started again at considerable expense to the creditor? Should not the system recognise—[Inaudible.]

I appreciate that these are complicated and detailed amendments. As I said, I would entirely accept written correspondence, and I shall be grateful for anything the Minister says today. However, they reflect an industry that is looking to make a success of both sides of the breathing space initiative but is concerned that some details are not provided for in the regulations as they exist at the moment.

Now I have finished.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Thank you for the clarification. I call the next speaker, the noble Lord, Lord Rooker.

[Lord Rooker (Lab) [V]]

My Lords, I counted at least three occasions when I thought that the noble Lord, Lord Lucas, had finished his incredibly thoughtful speech as he moved from one group to another. That is not a criticism by any stretch of the imagination, by the way. I will be extremely brief.

My name is on only a couple of amendments: Amendments 52 and 67. I have nothing new to say from what I said at Second Reading. I simply wanted to get my name on the amendments to show the widespread support for the issue raised by the noble Baroness, Lady Coussins. The key amendment in her name—Amendment 67—might be thought to be far too reasonable. If I were the Minister—and I have been in that position—I would accept it, I must say. I would go back and tell the boss that I had to accept it because it would have been made worse on Report—it may well do with another amendment with another date on it—and it would save everybody a lot of time. I did that more than once as a Minister, and it usually turned out okay.

I am very grateful for the work of the Money Advice Trust. This amendment affects what could be millions of people. We are talking about some really serious problems. I was taken by the examples given earlier in the debate on this group by the noble Lord, Lord Holmes of Richmond. I fully support the amendment and cannot see why it cannot be accepted now just to tidy everything up so that we do not have to spend more time on it on Report. I am not saying that it is not important but it is likely that, on Report, Ministers will be faced with a different date. I would accept this amendment and run with it. Everyone will be grateful if the Minister does so.

Finally, the Government deserve great thanks for Clause 34. I want to give credit where it is due. I have finished.

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[Baroness Meacher (CB) [V]]

My Lords, along with StepChange and many others working in the debt field, I welcome Clause 34, which I hope will provide some support and protection for vulnerable people with problem debts. I also very much welcome the amendments in the names of the noble Baronesses, Lady Coussins and Lady Morgan. I will not speak to those amendments, because all the main points have been extremely well made by the two Baronesses. However, I have the permission of the Government Whips Office—

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Baroness Meacher, forgive me, we are about to go into a Division, so if you will allow us to have an Adjournment for five minutes then we will return to your speech.

[Baroness Meacher (CB) [V]]

Okay.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Get your finger ready for button pressing.

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Amendments 53 and 54 not moved.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

We now come to the group consisting of Amendment 55.

Amendment 55

Moved by

--- Later in debate ---

Amendments 72 and 73 not moved.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

That concludes the work of the Committee this evening. The Committee stands adjourned. I remind Members to sanitise their desks and chairs before leaving the Room.

Committee adjourned at 7.24 pm.

Financial Services Bill

Lord Duncan of Springbank Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

The amendment would be a modest but important step forward. I do not necessarily expect acceptance from the Government today—although one can always live in hope—but I hope that they will at least go away and think seriously about this and other upgrading measures proposed in this Committee.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

I call the next speaker, the Lord Bishop of St Albans, but I cannot hear anything. I wonder whether he might be on mute.

[The Lord Bishop of St Albans [V]]

My Lords, I apologise; I am so sorry.

I am glad to speak in support of Amendment 107 in the names of the noble Lord, Lord Sikka, and the noble Baroness, Lady Bennett of Manor Castle. Throughout the course of this debate, there have been a number of comments on the current functioning of the FCA, the scope of its remit and whether it is properly undertaking its duties.

As the noble Lord, Lord Sikka, pointed out, there have been occasions when financial misconduct has not been fully disclosed, and it is worrying that this may have been due to interventions from those within government. As we establish our new position in the world following Brexit and seek to build on our financial services sector, it is vital that we are known for our honesty and transparency throughout the world. Our future will depend on this. So surely the amendment is entirely uncontroversial. The FCA is meant to be an independent regulator, not a direct arm of the Government. Hence, if Ministers have sought to intervene in any sort of FCA work or investigation, it should be a matter of transparency and disclosed.

Recently, the FCA dropped its investigation into Lookers, arguing it had instead made its concerns clear relating to the

“historic culture, systems and controls”

of the group. Why the investigation was not carried out to the full remains unclear—certainly to me, despite trying to find out. I imagine that many, including me, find the FCA’s answer unsatisfactory. It does not give us the assurances that we would hope an independent regulator would give.

Some commentators have noted that the dropping of this investigation seemed to coincide rather conveniently with the FCA’s new rules relating to car finance, brought in at the end of January 2021. Yet even these changes fell short of a mis-sell, which would undoubtedly have cost the providers of finance billions—strongly hinted at by the FCA’s 2019 report into car finance.

How the FCA came to its decision was in-house, even if it was sometimes perplexing to those of us outside. Nevertheless, in this instance, for example—and in many others—what we do not know is whether there has been any direct ministerial intervention to steer the FCA into any specific course of action. Many people would like reassurances that any intervention should be made in the interests of all and for the common good, particularly in customers’ best interests.

The amendment, in shining a light on what happens behind the FCA’s closed doors, would be a valuable addition to the Financial Services Bill. It would help in a mission that I know many in this House share to create a more transparent, robust and, dare I even say, moral financial system that in the long run will benefit all of us. I hope that the Government will look closely at either the amendment or something similar as we return to the matter later during the passage of the Bill through your Lordships’ House.

[Baroness Kramer (LD)]

My Lords, I need to spend more time, frankly, trying to understand the amendment. I would be genuinely shocked if Ministers interfered with an investigation of any of the regulators—certainly the FCA, the body at the centre of the amendment. I am not sufficiently familiar, I confess, with the Ministerial Code, but if the code does not make that clear, it would seem absolutely necessary that it does.

I perfectly understand concerns about the effectiveness of the FCA as a regulator in dealing with wrongful behaviour. It needs to be much more aggressive and transparent. We have talked earlier in Grand Committee about the HBOS Reading fraud scandal. The FCA was finally pressured into commissioning a report from Promontory, then did not publish it—only a summary that did not reflect in any significant way the actual conclusions of the report. That was extremely disturbing. We have also talked about the FCA’s actions under the senior managers and certification regime against Jes Staley, chief executive of Barclays—

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

My Lords, there is a Division, so we shall adjourn for five minutes and reconvene thereafter.

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[Lord Sikka (Lab) [V]]

I am grateful to all noble Lords for their contributions, but somewhat disappointed by the Minister’s response. The examples I gave—if I had time, I could add another dozen—all inevitably relate to the past, when, despite government efforts, things have come to public attention. At no point have Ministers ever volunteered information or made statements that they have stymied investigations.

In the parliamentary debate on the Banking Act 1987, which formally made the Bank of England the supervisor of banks, Ministers claimed that the Bank would be an independent regulator. Then we discovered that there was a whole process of cover-up—the BCCI case, for example. When the Bank of England ceased to be an independent regulator, the next one, the Financial Services Authority, came in. Again, it was claimed that that was independent. Well, under ministerial pressure, it did not intervene. It did not investigate HSBC’s misdemeanours in the UK, and indeed it was a party to cover-up in the US. The US House of Representatives committee report contains some correspondence showing how the Bank of England, the FSA and the Chancellor were pressuring the officials there to go easy on HSBC. The idea that somehow the FCA is some brand new version of independence which we ought to believe simply neglects what has happened in the past, and that is not really very helpful. Of course, Ministers can allay all public fears by simply saying, “Yes, we will embrace independence.” What is wrong with that?

I have visited the US on many occasions. I have met many academics, regulators and businesspeople, and I always ask them two questions when I deliver a seminar or after a meeting. The first question I ask is, “If you could commit financial crime, where would you like to commit it?” The response is always, “The US, because there is a lot of money to be made.” The next question I ask is, “If you are caught, where would you like to be prosecuted?” At that point, laughter sets in and they all say, “The UK.” Indeed, this country has become kind of a standing joke in regulatory circles. If I were referring to any other country and explaining how Ministers and regulators have colluded to protect organisations which, by their own admission, engage in criminal conduct, many Members of the House would say, “Well, that country is corrupt” or “It is a banana republic”. But I find it surprising that the ministerial response is basically “Well, we are good, and we don’t really need to take account of any of these events.” That is really the tip of a corrosive iceberg, because this corruption goes very deep.

I have asked Ministers a number of times to comment on the public statement of Anthony Stansfeld—the Thames Valley police and crime commissioner—that there is a “cover-up” at Cabinet level of the HBOS and RBS frauds. It is interesting that no Minister has denied it, and no Minister has confirmed it. I have quoted a statement from a very senior law enforcement officer—what could be a greater indictment of the UK’s regulation?

Finally, could the Minister please tell us why the Sandstorm report, which is sitting in 1,300 US libraries, is still a state secret in this country after 30 years? I do not know if it is appropriate for him to reply but I would not be opposed to that.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Does the Minister wish to respond?

[Earl Howe (Con)]

My Lords, the noble Lord has the advantage over me, because I am not personally privy to the case history that he cited, which is now 30 years or so old. However, I will consult my officials and write to him with an answer to his question.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Can I confirm with the noble Lord, Lord Sikka, that he does not wish to press his amendment?

[Lord Sikka (Lab) [V]]

I will withdraw the amendment for the time being.

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[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

We now come to the group beginning with Amendment 112.

Amendment 112

Moved by

Financial Services Bill

Lord Duncan of Springbank Excerpts

Report stage
Wednesday 24th March 2021 Lords Chamber

Given all that I have said, I contend that the requirement proposed by this amendment to hold such wide-ranging reviews every two or three years would place a significant time and cost burden on the regulators. I equally contend that this would be disproportionate, given the mechanisms and processes that already exist to hold the regulators to account and ensure that relevant information is in the public domain. I hope that the noble Baroness, on reflection, will agree with that assessment. Skilled oversight can take a number of forms, as she rightly observed in Grand Committee. I listed those that I think are key, not the least of which, as I mentioned, is the added degree of transparency, to which the new CEO of the FCA has committed himself in response to the Gloster report. In the light of all that I have said, I hope that the noble Baroness will feel sufficiently comfortable to withdraw her amendment.

[The Deputy Speaker (Lord Duncan of Springbank) (Con)]

My Lords, I have received no requests to speak after the Minister, so we will go straight back to the noble Baroness, Lady Bowles.

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Amendment 2 withdrawn.

[The Deputy Speaker (Lord Duncan of Springbank) (Con)]

We now come to the group beginning with Amendment 3. Anyone wishing to press this or anything else in this group to a Division must make that clear in the debate.

Amendment 3

Moved by