As scheduled, the FSM Bill had its report stage on 7 December and, eventually, at nearly 7pm, the Third Reading of the Bill took place and was agreed to. The Bill now moves to the Lords.
While we still await the new version of the Bill, the key Clauses discussed and debated were:
- The proposed new clause 17 on reporting requirements including some amendments proposed after the clause was first tabled, together with the other new clauses proposed by the Government on composition of panels, consultation on rules and unauthorised co-ownership AIFs
- A proposed new clause on a national strategy for fighting financial fraud which would require Treasury to publish a national strategy for the detection, prevention and investigation of fraud and associated financial crime
- Proposed new clauses on local community access to essential in-person banking services which would require Treasury and FCA to conduct and publish a review of community need for, and access to, essential in-person banking services, and to enable FCA to ensure that areas in need of such service have a minimum level of access to it, and Treasury to publish a policy statement about it
- Proposed new clauses on a duty for PRA and FCA to report on mutual and cooperative business models, requiring an annual statement on how the relevant regulator has considered the specific needs of the sector
- A proposed new clause to require Treasury to publish an updated Green Finance Strategy within three months of the passing of the Act
- A proposed new clause requiring Treasury to make provision to guarantee a minimum level of access to free of charge cash access services
- A proposed new stewardship reporting requirement for OPS and new reporting requirements for certain investors, as well as a new clause on investment duties of OPS and personal pension providers
- A duty on the Consumer Panel to report annually to Parliament on how FCA has performed against its statutory duty to protect consumers
- A clause enabling Treasury to make provision for UK citizens who are unlikely to have access to financial advice to be able to get advice to improve their “financial sustainability”
- A requirement on PRA and FCA to publish regulatory performance information on new authorisations and on activities relating to authorised firms
- New requirements in relation to determining applications
- A new duty on regulators to report on competitiveness and growth objectives
- A new clause defining the regulatory proportionality principle
- A new clause proposing a requirement on financial institutions to reserve £1 for every £1 used to finance assets connected with fossil fuel activities
- New clauses requiring FCA to have regard to financial inclusion in its consumer protection objective and to report on financial inclusion annually
- A new prohibition that would ban any person carrying on a regulated activity in the UK that may directly or indirectly support a commercial activity relating to forest risk commodities or derivative products unless local laws are complied with in relation to that activity, and also a clause to ban banks carrying out activities that would have the effect of providing financial investment in, or facilitating the financing of, new fossil fuel developments
- A new duty on FCA to act in accordance with a new climate safety objective and nature objective, in place of its competition objective
- A ban on refusing to provide services for reasons connected with freedom of expression
- A requirement on Treasury to legislate for BNPL regulation within 28 days of the passing of the Act
- A new requirement to require regulatory CBAs to include assessments of the risk of economic crime arising from the proposed rules
- A proposal to establish the “Financial Regulator’s Supervision Council”
- New clauses setting out the PRA and FCA’s duty of care and disapplying their immunity from civil damages actions where a consumer has suffered material loss which the regulator should have been aware of and negligently failed to take action to prevent the loss
- A reporting requirement on the Green agenda
- A general duty on all financial services providers to report fraud or suspected fraud to the appropriate authority
- Proposed amendments that will allow regulators to remove EU-derived rules from the rulebook without consultation where it is proportionate to do so
Some of these clauses were new, some were government amendments, but others were clauses that had already been debated and negatived in the Public Bills Committee.
Andrew Griffith spent much of his time discussing regulatory powers, access to cash and payment services, and financial inclusion. He provided some direction and Government commitment on changes proposed by the opposition that the Government would not be supporting for inclusion in the Bill. He also spoke of the Governments thoughts on financing green energy.
It was noted that the FT had suggested the Chancellor is to make a significant statement on the future of financial services – in Scotland on 9 December. He noted that statements of this nature should be made in the House. Andrew Griffith made no comment.
Tulip Siddiq, speaking for the opposition, said Labour is delighted that the intervention power proposal has been dropped. She also appreciated that the way in which the Bill allows unprecedented transfer of responsibilities from retained EU law to the regulators means that there must be democratic accountability and therefore welcomed the new Clause 17. She was also pleased with the proposals for regulated personalised guidance. She reiterated that overall the Opposition supports the Bill, although it does have shortcomings – she particularly noted her concerns in relation to fraud prevention. She then moved on to access to cash, and noted that the Bill currently does nothing to protect face-to-face banking or free access to cash, both of which are essential. She also criticised the lack of action on green finance, given the targets the Government has missed.
Vicky Ford, MP for Chelmsford, spoke on the difficulties firms are facing with the current delays in authorisations and approvals.
Peter Grant, for the SNP, reiterated the stance the SNP had taken in Committee. It appreciates the need for complete overhaul of the regulatory framework but has concerns about some of the Government’s proposals for achieving this. In particular, the SNP is concerned about the lack of provisions on financial inclusion and says the anti-fraud measures do not go far enough. The SNP is also concerned about unnecessary deviation from EU standards, given the desire of many in Scotland to re-join the EU.
Harriet Baldwin spoke to her proposal for availability of financial advice, and Chris Grayling on the clauses aiming to address deforestation, and Caroline Lucas spoke of her additions to the regulatory objectives, while Wera Hobhouse spoke to the amendments that would remove a significant barrier to prevent private investment contributing to a sustainable net zero future.
Siobhan McDonagh then spoke on access to cash, as she had done in Committee. She stressed that adding the word “free” into the bill in respect of the provision of ATMs would not result in any paid ATMs being removed. Other speakers reverted to this, including noting that FCA must have visibility over the ability to use cash.
Richard Fuller spoke on how crucial international competition is.
Sarah Olney said the Liberal Democrats continue to be concerned about lack of regulatory accountability, and feel the Government must to more to protect consumers against fraud
Sally-Ann Hart spoke of the importance of not allowing financial institutions to refuse to provide service on the basis of not liking a customer.
Nick Smith, for Blaenau Gwent spoke in support of the waiving of regulatory immunity, citing the FCA’s failure to act quickly enough in respect of the British Steel Pension Scheme as a good example.
Emma Hardy spoke on financial inclusion – and her concern that at best it is viewed as an “add on” once products have already been developed.
Stella Creasy spoke of the urgent need to regulate BNPL, and questioned why regulation is taking so long when everyone agrees it must happen.
Eventually, new clauses 17 to 20 from the latest amendment paper were agreed and added to the Bill.
New Clause 1 (financial fraud strategy) was narrowly negatived
New Clause 2 (local community access to essential in-person banking services) was narrowly negatived
New Clause 7 (access to cash – guaranteed minimum provision) was narrowly negatived