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My Lords, it is a pleasure to open day two of Committee on the Financial Services and Markets Bill. As it is the first time I have spoken in Committee, I declare my interests as set out in the register around technology, as an adviser variously to the Crown Estate, Endava plc, Simmons & Simmons LLP, and as non-exec director of Avalanche BVI Inc and the Avalanche Foundation.
I had hoped to take part in day one of your Lordships’ deliberations on the Bill, but unfortunately there was a direct clash with the Sporting Events Bill in the Chamber. I was hoping to be able to perform some kind of Bill biathlon but, sadly, time clearly caught up with me and I found myself stuck on the track in there. However, it is a pleasure to open day two of the Bill. I will move Amendment 47A and speak to the other amendments in this group in my name. I give more than a nod to the other amendments in this group and I thank my noble friend Lady Neville-Rolfe for co-signing two of my amendments.
In essence, these amendments can be seen as a connected group. The intention set out in the Bill is clear that the PSR is no more and its functions are to move over to the FCA. That is a defensible and clear objective and it has been communicated. The difficulty is that it is not what the Bill currently achieves. In many ways, these amendments could be summed up by “Lost in Translation”, because key elements of the functions of the PSR, not least those critical elements around competition and innovation, have not come over and certainly have not been reproduced in the Bill to the same extent as they appear in their original statutory form. This is clearly a gap in the Bill that we have before us.
Amendment 47A suggests a payment systems panel. This goes to the second element of “Lost in Translation” in the Bill. Representation of those involved in and affected by payments has similarly disappeared and has not come across from the wording in the originating statute. This is critical, not only because it does not fulfil the Government’s stated intention with these parts of the Bill but because, when you think about it, so much in life involves a payment. Something is either started with a payment or ended with a payment and, if it is neither started nor ended with a payment, odds-on it is probably a payment in its own right. This needs to be put right in the Bill and I suggest that the payment system panel achieves that.
The remaining amendments in my name very much go to putting back those requirements and obligations, as set out in the originating statute, around competition and innovation. The Government have talked variously about the growth objective, not least the role that regulators have to play in it. Indeed, they summoned regulators to No. 11 for a regulators’ showdown—I am not sure what the collective noun for a group of regulators is, but it was certainly a gathering—focused solely on growth. Well, competition and innovation are critical to that growth objective.
I suggest that this suite of amendments fills the gap that is left in the existing draft of the Bill. I very much look forward to the Minister’s response and to the debate on this and the other amendments—those who have put them forward have all done so on similar and related issues. I beg to move.
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My Lords, I shall speak to my Amendment 48. It addresses a simple but important point: the quality of regulation depends on the quality of consultation. At present, consultation periods vary unpredictably. Some run for many weeks; others, even on significant policy shifts, have been compressed into days. That inconsistency makes a system difficult for firms to plan around, inaccessible for consumer groups and individuals, and challenging for Parliament to scrutinise. I am a serial responder to consultations—I have been for over 20 years, not just on financial services—and I have experienced this difficulty myself.
The Lords Financial Services Regulation Committee, on which I serve, along with several other Members who are present in this Committee, heard extensive evidence on this. In our report Growing Pains, we concluded that the FCA and PRA need a better understanding of the lived experience of regulated firms in coping with consultations, policy statements, “Dear CEO” letters and the plethora of regulatory tools now used. That is a polite way of saying that the system is overloaded and fragmented.
My amendment would introduce proportionate, predictable windows: four to six weeks for minor changes and six to eight weeks for material ones. I seem to recall that, in Brussels, the time allowed was two months and for more complicated things an extension was available of three months. It would also be in line with that, so not out of line with international thinking. The amendment also sets out the factors that regulators must consider when deciding whether a proposal is minor or material. That embeds proportionality but without rigidity. I envisage that there could be, again, the opportunity for extensions in difficult cases. The FCA quite often does that, but usually quite late, after you have had a panic. Crucially, regulators may depart from these windows in exceptional circumstances, as I have said, but they must explain why. That is transparency, not constraint. It ensures that urgency can be accommodated but not used as a blanket justification for compressed consultation.
Predictable consultation matters because it is the only point where Parliament, industry, consumer groups, individuals and civil society generally can influence policy and rule-making. If windows are unpredictable or too short, smaller firms and resource-constrained consumer bodies are effectively excluded. Trade associations cannot consult their members, but their responses are important, as we know that many firms are reluctant to respond directly, for fear of being seen as criticising regulators and suffering supervisory consequences.