My Lords, I am grateful to noble Lords who contributed to the debate. I have listened carefully to the interesting points, particularly on banking diversity and availability, especially for SMEs, made by the noble Baroness, Lady Kramer, and the noble Lord, Lord Davies, but I will concentrate on the amendment in hand.
I am glad to say that noble Lords are pushing at an open door—or, at least, one that is slightly ajar. This amendment would add a duty to the PRA to consider diversity of ownership model and size alongside its competition objectives. For the FCA, the amendment would add diversity of ownership model and size to the list of factors to which it may have regard as part of its competition objective.
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I am grateful to my noble friend Lord Naseby for raising this issue, and particularly for waiting patiently for the last group of the entire Committee stage to move his amendment. I pay tribute to the work that he has undertaken in advancing the cause of mutuality, such as the Mutuals’ Deferred Shares Act 2015. As I think my noble friend said, the Minister had a constructive meeting with him recently and the Government have been actively considering his proposal, which makes a number of excellent points. I reassure the Committee that the Government strongly support a diverse financial service sector and, as has been acknowledged, the regulators’ objectives go some way to providing a mandate in this regard.
The regulators already have competition objectives: the FCA is required to,
“promote effective competition in the interests of consumers”,
of regulated financial services, and the PRA is required to facilitate,
“effective competition in the markets for”,
financial services provided by PRA-authorised firms. In advancing this objective, the regulators may take account of various factors, including barriers to entry
for new providers of financial services, the needs of different consumers and the differences of businesses. I would expect their considerations around the intensity of competition to involve not just the number of competitors but diversity of approach, including corporate form.
The statute is also clear that the regulators should recognise the different features of a range of diverse business models when pursuing objectives. This is achieved by the principle of good regulation, whereby the regulators must have regard to,
“the desirability where appropriate of each regulator exercising its functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons subject to requirements imposed by or under this Act”.
Having said that, and taking on board my noble friend Lord Naseby’s point about things that are in regulations, there could be more clarity on our expectations around regulatory regard for mutuals, which might help to avoid some of the problems that he raised.
My noble friend’s amendment raises some interesting and useful points and, given this, we will actively consider how these proposals might clarify the existing competition objectives. We look forward to discussing this subject with my noble friend again before Report. I will of course take note as well of the suggestion of the noble Baroness, Lady Kramer, on consultation. In the light of that commitment, I would be grateful if my noble friend would withdraw his amendment this afternoon.