Financial Services Bill

I wish to join others in acknowledging the strong case that members of the Treasury Committee have made on the issues addressed in new clause 1. Like others, I do not think that new clause 1, in itself, goes far enough in resolving some of the Bill's deficiencies, but it is a commendable effort. As we are dealing with a number of proposals that appear on the amendment paper under the heading ““Governance of the Bank of England and the new regulatory structure””, there is a danger that we might make the mistake of thinking that all the provisions are about issues inside the beltway; we may think that they are all about parliamentary influence, scrutiny and the relationships between the Financial Policy Committee, the Bank of England and the Treasury and so on. Of course, as we heard in the remarks made by the hon. Member for Nottingham East (Chris Leslie), many of these provisions touch directly on issues that we thought we were discussing in the previous grouping in relation to consumer protection and the consumer interest. I wish to discuss a number of the amendments in this group that I have tabled, particularly new clause 13. It is aimed at dealing with what seems to be a fairly gaping loophole in the Bill and relates to provisions in clause 25, on page 108, and the regime for consolidated supervision of the parent undertakings of financial institutions. The provisions in the Bill as they stand would mean that the only parent undertakings that will be regulated under consolidated supervision are those that were deemed to be financial institutions, whereas those that were not deemed to be financial institutions would be immune. Given the changes we are seeing in the financial services market—including the activities of groups such as Tesco and the arrival of Virgin—we must ask whether there is a danger of an unlevel playing field for other providers in which some are subjected to consolidated supervision whereas others are not. More importantly, it gives rise to questions for consumers. Are they duly protected? Are those bodies that are not subject to consolidated supervision able to use their market intelligence in particular ways? Can they use their business, market and customer relationship with many people to the disadvantage of either consumers or other players? New clause 13 makes provision for what would happen so long as the Government wanted to go along the lines outlined in clause 25, which would allow the Treasury to amend the legislation by order in future and therefore change the qualification for financial institutions. If the Treasury were to say that that was to be the future proofing against other market changes, I would want it to be subject to regular review and assessment that would be brought before this House. The new clause therefore provides that the powers given to the Treasury to amend the legislation would be the subject of a review within the first year after the Bill received Royal Assent and of annual assessments after that. The power in the Bill to reconsider these matters rests entirely with the Treasury and not the regulators, whom we would assume would hear from other practitioners and from the consumers. The new clause creates a proper scenario of assessment by the regulators and the Treasury. I have put my name to other amendments in this group which also address consumer interest. They concern some of the language that would be used and expected as regards consumers as well as the status of the consumer panel. We are told that there will be a consumer panel for the FCA, but it is given no remit as regards the PRA, even though on some measures the FCA will have a duty to co-ordinate with the PRA. Some of those issues will, clearly, be about consumer interest. There is not the same scrutiny, comeback or advocacy for consumers built into the provisions for the PRA as there is for the FCA, and so a number of the other amendments would address that, not least amendments 69 and 70. Amendment 71 provides for improvements in the duty to co-ordinate between the FCA and the PRA. As I read the Bill, the duties on them to co-ordinate relate to their own interests and considerations. They are meant to consider what matters to them and to each other. I do not think enough is built in about the regard they are meant to have for the impact of their collective or separate efforts on firms that are subject to dual regulation. Nor is there sufficient emphasis on their having proper regard to consumer interest. This group of amendments is not just about governance and the relationship between the democratic process and regulation. It also goes to the heart of what regulation should be about, which is protecting the consumer interest and ensuring fair play in the marketplace.