The Financial Services and Markets Bill was promised in the Queen’s Speech on May 11, 2022 and then given first reading in the House of Commons on July 20th 2022. Although first reading is largely a procedural matter, it provided an opportunity for a closer look at the proposed legislation, in particular details of measures relating to regulatory reform, crypto and financial inclusion. All key policy areas for Chris.
The bill, in broad terms, is said to seize the opportunities of Brexit, tailoring financial services regulation to UK markets to bolster the competitiveness of the UK as a global financial centre and deliver better outcomes for consumers and businesses. The government states that the bill will:
- implement the outcomes of the future regulatory framework review,
- maintain the UK’s position as an open and global financial hub,
- harness the opportunities of innovative technologies in financial services,
- bolster the competitiveness of UK markets and promote the effective use of capital, and
- support the levelling up agenda, promote financial inclusion, and consumer protection.
This, in summary, is the purpose of the substantial, 330 page, bill.
The next step in the legislative process was second reading, which took place in the House of Commons on September 7th, 2022. Second reading is an important step in which MPs can identify areas of concern and seek clarification on particular issues. Despite warm words and generally widespread support from across the house, the final part of the bill, dealing with financial inclusion, raised the majority of questions and concerns. Several MPs focused on the issue of access to cash, seeking reassurance that access to cash would be free, that ‘reasonable access’, would be carefully defined to cover distance, accessibility, include face to face banking services and also consider cash acceptance and cash infrastructure.
Unfortunately, the Minister could not reassure the House:
“When I say “access to cash” I mean access to cash. My Honourable Friend raises the question of whether that access should be free; that is a matter to which we will return in Committee, but I cannot give him that assurance at this stage.”The Economic Secretary to the Treasury, Richard Fuller MP
Other MPs raised the issue of Buy Now Pay Later (BNPL), the terrible situation facing ‘mortgage prisoners’, people trapped in high-cost mortgages, the need for more affordable credit and whether the FCA should have a ‘must have regard to financial inclusion duty.’ Chris has spent years campaigning on improving financial inclusion and has raised many of these issues in Parliament.
Powerful arguments were also made about the environment. Caroline Lucas MP pointed out:
“The Bill contains a new statutory objective on competitiveness and growth, which ranks those elements above the UK’s legally binding nature and climate targets. Given that a thriving economy depends on a thriving environment, will the Minister look at this again and consider introducing a climate-and-nature-specific statutory objective as well…?”Caroline Lucas MP
She went on to point out that we have “a real opportunity to be a green competitive financial centre.”
These are familiar arguments, similar to those Chris and colleagues made in made in the UK Infrastructure Bank Bill debates recently when they pushed the government to be absolutely clear about how they would ensure that the bank invests in infrastructure that will tackle climate change as well as supporting economic growth.
Concerns were also raised about the regulators, particularly around power, accountability, and capability. In terms of accountability, questions were asked about whether the Henry VIII powers – passing power from Parliament to the executive (in this case regulators and Treasury) would lead to a lack of appropriate accountability for Parliament – Angela Eagle MP said she was worried about “the fact that a great deal of extra power will be given to the regulators and the Treasury.”
John McDonnell MP was the most critical of the FCA stating that the FCA has been a “catastrophic failure.” He also pointed out that “40 bodies are regulating our finance sector in some way and there is a need for consolidation and to learn the lessons of experiences so far.”
Other concerns centred around the need for greater action to prevent scams and improve fraud protection; for example, the suggestion by Damien Hinds MP that push payment scams and auto reimbursement should extend beyond banks to social media firms and tech companies.
It is excellent that all these important issues have ben raised and as the Bill progresses through its Parliamentary stages there will plenty of opportunity to see if the bill can me amended and improved. Watch this space.
The Westminster Series: The arrival of the Financial Services and Markets Bill, Finextra, 26 July 2022
The Westminster Series: The second reading of the Financial Services and Markets Bill, Finextra, 17 October 2022
The Financial Services and Markets Bill – second reading, CityAM, 29 September 2022