John Glen
MP for Salisbury · Conservative · United Kingdom
“I welcome the Chief Secretary to her new position, but what words of comfort could she give the residents of Salisbury in Wiltshire, a unitary authority? We are not part of a combined authority and we do not have a metro mayor.”
“Sam Moody is my constituent. He is the chief executive of Rockhopper. During my time in this House, he has been absolutely scrupulous in following the laws of this country and respecting the Falkland Islanders.”
“I listened carefully to what the Minister said about the process, and I respect that. But most people who take a pretty level-headed, pragmatic view of the need for a transition over time still cannot get their heads around the short-term reality: when we have so much turmoil in the middle east, why would we extend the time that we are no…”
“It is 55 days till the Budget. Given the market’s reaction to the Prime Minister’s statement on Tuesday, and given that our gilt rates are higher than those of our peers in the G7, could we have a debate on the implications of higher taxes for growth?”
“Before the hon. Lady makes her statement on Thursday, will she, when reflecting on the arrangement in Wiltshire that would embrace Wessex—although we have been told that that is not the Government’s view—address the prevailing concern that the people of rural Wiltshire will be considerably worse off without having the opportunity to embra…”
“I recognise that the Minister wants to come to what the Government are going to do, but does he not accept that the decisions already made in the last two years—with respect to the price of employment and the national living wage, the cost of employment with regard to legislation, and business rates—have depressed the appetite of many sma…”
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“It enhances the competitiveness of the sector and ensures it continues to deliver for UK consumers and businesses. The Act extended the powers for the PRA to make rules that apply to holding companies for the purposes of prudential regulation. Accordingly, the Act granted the FPC the ability to make directions or recommendations that relate to holding companies, ensuring a coherent regime under which holding companies become responsible for meeting prudential requirements. Consistent with those changes, the instrument amends the FPC’s existing powers of direction where necessary, so that they can also be applied in relation to holding companies.”
“Successive Governments have legislated to provide the FPC with the powers of direction it needs to address risks to financial stability. Through those existing powers, the FPC can ensure that firms are not allowed to take on excessive levels of leverage, effectively tackle systemic risks in the UK housing market and vary firms’ capital requirements against exposures to specific sectors over time. This statutory instrument amends the existing powers of direction granted to the FPC by Parliament to ensure that they continue to operate effectively given changes that have been made to the wider prudential regime since they were first introduced. The Financial Services Act 2021 represents a major milestone in shaping a regulatory framework for UK financial services outside of the EU.”
“I beg to move, That the Committee has considered the draft Bank of England Act 1998 (Macro-prudential Measures) (Amendment) Order 2021. May I say what a pleasure it is to serve under your chairmanship, Mr Efford? Since the financial crisis, the Government have implemented significant reforms to address the problems of the past and make the financial sector safer and more stable. The key element of those reforms was establishing the Financial Policy Committee, the FPC, which is responsible for identifying, monitoring and addressing risks to the financial system as a whole. The FPC addresses macro-prudential risks through its powers to issue recommendations and, importantly, directions to the Prudential Regulatory Authority, the PRA, and the Financial Conduct Authority, the FCA.”
“The provisions essentially ensure that we have absolute alignment of the FPC’s responsibilities and discretions to the new environment that we passed in the 2021 Act. I hope that addresses the questions that have been raised—I am happy to give way to the right hon. Gentleman if not.”
“For example, the FPC requires the leverage ratio to be met with a higher quality of capital than the Basel framework and includes some buffers that are not mandated by Basel. However, the UK framework would potentially be sub-equivalent to Basel on a line-by-line basis, as, for instance, the FPC framework does not put restrictions on distribution —for example, the paying of dividends—if a firm breaches its leverage ratio requirements. It also has a lower leverage buffer for globally systemic important banks. There has been little reaction to these measures at the moment, but we will continue to monitor that. These are obviously complex matters that the Treasury keeps under close review.”
“In addition, the PRA has proposed other less significant changes, which reflect updated Basel standards relating to the leverage exposure measure used for calculating the ratio, and reporting and disclosure requirements, aligning with the Basel III standards to ensure that the UK remains consistent with transparency requirements in other jurisdictions. The review of the leverage ratio framework took place in the light of those revised Basel standards. They require the leverage ratio to be applied to internationally active banks and therefore the main change being proposed to the framework moves the UK closer to international standards. If the consultation proposals are implemented, the FPC will argue that the UK leverage ratio framework would be equivalent to Basel standards on an outcomes basis—indeed, in some areas, super-equivalent.”
“The third element is the level of the application—the leverage ratio framework would generally be extended at the individual level, except where a relevant firm is subject to a requirement on the basis of its consolidated situation. The PRA would also have discretion to allow a sub-consolidated requirement, rather than an individual one, to be applied in certain circumstances. The Bank believes that the extension of the leverage ratio framework to internationally active firms would only result in modest additional costs for firms, which reflects that, for many firms, their risk-weighted capital requirements remain more binding than their leverage ratio requirements, firms typically hold management buffers above their capital requirements or they are part of wider groups.”
“The second is around scope—to extend the framework to UK banks, building societies, investment firms with significant non-UK assets and, where relevant, certain holding companies, which reflects the importance that such firms have for the functioning of the UK financial market and that the Basel standards require the leverage ratio to be applied to internationally active banks. The PRA propose to extend the leverage ratio of firms with non-UK assets of at least £10 billion, which will capture the larger, non-ringfenced banks and international broker dealers, including Goldman Sachs, JP Morgan and Morgan Stanley.”
“Separately, the PRA also maintains a supervisory expectation that all firms maintain a minimum leverage ratio. The FPC and PRA have undertaken a review of the UK leverage ratio framework in the light of the finalised international standards. The Bank published a consultation on the outcome of that review on 29 June and there are three main proposals incorporated in the FPC’s consultation. The first is the level. The proposal is to keep the existing leverage ratio framework broadly unchanged for UK consolidated groups of major UK banks, apart from implementing the Basel 3.1 changes.”
“It may be helpful to the Committee if I set out that that leverage ratio is an indicator of a firm’s solvency relating to its capital resources and assets and, unlike the risk-weighted capital framework, a leverage ratio does not seek to estimate the relative riskiness of assets. The purpose of the leverage ratio requirement, alongside risk-weighted capital requirements, is to guard against the danger that the firm’s models or regulatory requirements fail to reflect the current riskiness of its assets. Currently, the leverage ratio framework requires that major banks and building societies satisfy a minimum tier 1 leverage ratio of 3.25% on a measure of exposures that excludes central bank reserves, along with various buffers that relate to those in the risk-weighted capital framework.”
“As ever, I thank the right hon. Gentleman for his questions. He referenced the leverage framework, on which I will go into some detail in answering his second and third questions. It is the Government’s view that this instrument is necessary to ensure that the existing macro-prudential tools that the FPC has continue to operate effectively in the light of the changes that we have made in that wider prudential regime. In so far as all those changes are consequential of decisions made five years ago, I suppose that there is a tangential link, but it is not a direct causal relationship. The right hon. Gentleman also asked about the leverage framework.”
“I confirm to the right hon. Gentleman that we do not. Though we are outside the capital requirements regime of the EU, our objective is to align to the highest global standards—we will just do that in a way that reflects the nuances of our banking system. We will always maintain the highest possible standards. Indeed, our international reputation relies on it. I hope that the Committee has found my observations helpful to some degree and will be able to support the order. Question put and agreed to.”
“This is clearly a very complex area, but ultimately the FCA cannot be said to have the same set of responsibilities towards unauthorised firms engaged in unregulated activities.”
“It is true that although several other firms were involved in the distribution of Blackmore bonds, some of which were authorised by the FCA, the Blackmore bond itself was not regulated. Amyma was not directly authorised by the FCA. It was an appointed representative of another authorised firm, Equity For Growth (Securities) Ltd, between July 2018 and September 2019, when its status was terminated. The FCA intervened to take down Amyma’s website following further investigation. Similarly, as a result of steps taken by the FCA, Northern Provident Investments, an FCA-authorised firm, withdrew its approval of Blackmore’s promotional materials, meaning that its bonds could no longer be marketed.”
“I will also touch on the conduct of the FCA, the independent regulator. Let me first remind the House of the background to this situation. As Members will be aware, Blackmore Bond was an unregulated firm established in 2016. Between 2016 and 2018, it issued non-transferable debt securities, otherwise known as mini-bonds, to retail investors. It raised £46 million, involving approximately 2,800 UK investors, to be used in property development projects. Blackmore stopped making coupon payments in 2019 and administrators were appointed on 22 April last year. The orientation of most of the hon. Gentleman’s remarks was about the failures of the FCA, but I want to try to address some of his other specific points. He asked about the way that Blackmore hid behind other regulated firms such as Amyma.”
“I congratulate the hon. Member for Glenrothes (Peter Grant) on securing this debate. I also pay tribute to the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for their contributions. I extend my sympathies to the Blackmore Bond investors. The hon. Member for Glenrothes set out the distress that has been caused to those many individuals, some of whom are his constituents. I am painfully aware of their very challenging situation through my own conversations and correspondence, and this evening we have heard more of those troubling accounts. Given these difficult circumstances, it is only right that I explain the reasoning behind the Government’s course of action and some of the decisions that we have made so far.”
“We continue to keep the legislative framework underpinning the regulation of financial promotions under review, including whether it is suitable for the digital age. The Government have set out our intention to bring forward legislation to create a regulatory gateway for authorised firms approving the promotion of unauthorised firms. That change is designed to strengthen the regime by ensuring that the firms able to approve financial promotions are limited to those with the relevant expertise to do so. The FCA will be able to better identify when a financial promotion has breached the restriction and take action accordingly.”
“That is why in April we launched a consultation that includes proposals to bring the issuance of mini-bonds into regulation. This follows the action taken by the FCA to ban the promotion of high-risk mini-bonds. This work is the culmination of a review into the regulation of mini-bonds that I announced in May 2019, and it delivers on one of the recommendations of Dame Elizabeth Gloster’s recent report. The consultation closes next month, in July, after which the Government hope to bring forward plans to legislate in the autumn. The hon. Member for Glenrothes also referred to the financial promotions regime, and I think that underlying that was a concern about what the Government are doing to improve the efficacy of the regime.”
“I have set out the record as the FCA has presented it. I am sure that the hon. Gentleman will wish to continue correspondence with the FCA on some of those unresolved matters. However, I do make the distinction between the different responsibilities that the FCA has with regard to the different actors in this case. It is only right that we do our utmost to minimise the chance of episodes like Blackmore Bond taking place in future, so I want to turn to the regulation of mini-bonds and the steps we are taking to safeguard consumers, which was a key focus of the hon. Gentleman’s remarks. I want to be clear to the House that the Government are committed to ensuring that the financial services sector is well regulated and consumers are adequately protected.”
“There can be no complacency. This is a complex area where financial services are evolving all the time, as are fraudulent activities. My hon. Friend the Member for Thirsk and Malton mentioned the innovation announced today by Google, which is a welcome step, but we will need to look at these matters and at the experience through different cases, such as the Blackmore Bond, in order to get this right. I close by reiterating my deep sympathies to all those who have suffered as a result of the Blackmore scheme. As a Government, we recognise that financial services are constantly evolving and the regulatory system must, therefore, be ready to respond. As I have highlighted this evening, we are committed to a process of continuous improvement in all dimensions to ensure our regulations benefit both UK consumers and the wider economy.”
“The programme will help the regulator become more efficient and effective by, among other things, enhancing its use of technology in order to make interventions earlier, which clearly is desirable. It is heartening to see that significant steps have already been taken. Those include important structural changes within the organisation, as well as the appointment of the FCA’s first chief data information and intelligence officer. I particularly welcome this focus on improving the FCA’s use of data and analytics, which will improve the efficiency and speed with which the regulator can act. These are serious matters, and we have spoken about the number of our constituents who have been adversely affected. I regularly meet the FCA’s chief executive, Nikhil Rathi, to discuss the transformation programme and monitor progress.”
“I thank my hon. Friend for his intervention. He speaks with some authority on these matters. There is a process that will continue, as he knows, through the scrutiny of that legislative vehicle. We do need to make sure that, overall, including through the Department for Digital, Culture, Media and Sport’s online advertising review, we come out at the right place in dealing with these significant challenges for consumers. As well as introducing new legislation to protect savers, it is right that our regulator also closely examines its own operations, to ensure that it can protect consumers as effectively as possible. As a result, the Government welcome the FCA’s ongoing transformation programme, which is introducing reforms that will fundamentally change the way it works.”
“I should also note that the Secondary Legislation Scrutiny Committee has reported on this SI as an instrument of interest. We have answered all questions pertaining to that, and the SI passed through the Lords a few weeks ago. In conclusion, this SI is necessary to provide certainty for UK firms, and I commend these regulations to the Committee this morning.”
“However, there is a requirement for EEA systems in the transitional regime to submit an application by 30 June 2021—next Wednesday—otherwise they will immediately lose the protections provided for in the regime. This instrument amends the consequences of failing to apply by this deadline. Instead of immediately losing settlement finality protections under the temporary designation regime, EEA systems will retain protections for an additional two years. This ensures that UK firms which are using those EEA systems have sufficient time to put mitigants in place should access to those systems be impacted. The Treasury has worked closely with the Bank of England and the Financial Conduct Authority to prepare this instrument. We have also engaged extensively with the financial services industry on the instrument to which this SI relates.”
“This could result in increased costs or even loss of access to providers of financial market services who need to use these systems in the EEA. In the SI that we are amending today, a UK framework was established to allow any non-UK system to apply to the Bank of England for designation, so that it could receive settlement finality protections under UK law. It also established a temporary designation regime to provide UK insolvency protections for a period of three years to existing designated EEA systems that intended to apply for permanent designation under the UK’s framework. The purpose of temporary designation is to allow time for applications to be processed by the Bank of England, while ensuring continuity of access for UK firms to relevant EEA systems.”
“This meant that, where a designated system had received funds or securities from a system user—for example, a UK bank—then those funds or securities could not be clawed back in the event of the UK bank being subject to insolvency proceedings. In treating transactions made through a designated system as final and irreversible, this framework ensured that these vital elements of the financial plumbing were not at risk where individual members were in insolvency procedures. Without these protections set out in legislation, there would be an increased burden on members of these systems, given that they would have to provide further assurance that, in the event of insolvency, payments they had made to a system could not be reversed.”
“This SI amends a transitional regime created in an earlier financial services EU Exit instrument, to ensure that the transitional regime continues to provide continuity for UK firms, as was originally intended. The original SI, which this instrument amends, onshored the insolvency-related protections that are provided to systems under the EU settlement finality directive—or SFD. These systems are financial market infrastructure such as central counterparties, central securities depositories and payment systems, which provide essential services and functions relied upon by the financial services sector. Prior to the end of the transition period, if an EEA-based system was designated under the SFD, it received specific protections from insolvency laws across all EEA states and the UK.”
“I beg to move, That the Committee has considered the draft Financial Markets and Insolvency (Transitional Provision) (EU Exit) (Amendment) Regulations 2021. It is a pleasure to serve under your chairmanship, Mr Roberston. As the Committee will be aware, prior to the end of the transition period, the Treasury introduced more than 65 statutory instruments under the European Union (Withdrawal) Act 2018. This was a significant programme of legislation. These SIs covered all the essential legislative changes that needed to be in law to ensure we had an effective and coherent financial services regulatory regime at the end of the transition period.”
“As ever, I am grateful to the right hon. Gentleman for his contribution. I do not think he raised any substantive points and do not want to detain the Committee with a wider political discussion. All I would say is that the Government’s view is that this instrument is necessary to ensure that the transitional regime for the settlement finality protection of EEA systems continues to provide that continuity for UK firms. About 37 systems are in play, and we anticipate that the vast majority will have made applications by next week. I will continue to do whatever is necessary to protect the integrity of the system. I commend the regulations to the Committee. Question put and agreed to.”
“The Government have put together an unprecedented package of support for the self-employed, including the self-employed income support scheme, the temporary £20 per week increase in the universal credit standard allowance, and temporarily suspending the minimum income floor. The self-employed are also able to access the restart grant, the recovery loan scheme and business rates relief.”
“The hon. Gentleman makes a very sensible and worthwhile point on this matter. We are looking closely at the Financial Conduct Authority’s “Financial Lives” survey, which indicates the degree of liquidity that exists. I work closely with the lenders on affordability assessments for the self-employed. I am happy to commit to continue to keep this matter under review and to receive further representations from him.”
“The Chancellor set out the Government’s strategy on financial services to the House in November—a vision of a sector that is more open, more technologically advanced and a world leader in the use of green finance, serving the communities and citizens of this country. Since then, we passed the Financial Services Act 2021 in April to begin the necessary reforms to our framework, and we have agreed text with the EU for a regulatory co-operation forum.”
“I am very happy to agree with my hon. Friend. I experienced that myself with my hon. Friend the Member for North Wiltshire (James Gray). The parliamentary export programme is an excellent way of getting that ambition to export out across the country, and it is just another example of this Government’s commitment to grow exports. My hon. Friend the Member for Wrexham (Sarah Atherton) may also be interested to know that I shall be visiting Cardiff tomorrow to meet the first cohort of FinTech Wales’s FinTech Foundry, a new accelerator programme that will support firms as they seek to build their footprint.”
“I thank my right hon. Friend for his representations on this matter, and I heartily agree with him. We are promoting the international role of the sector and developing ambitious trade and regulatory relationships with other jurisdictions. We keep all these matters under review. We have taken on board the work of the taskforce on innovation, growth and regulatory reform, and just after Question Time, the Chancellor and I will be meeting representatives of banks as we seek to work with them to make those interventions that our financial services sector needs.”
“I do not accept the right hon. Gentleman’s characterisation of where we are. On financial services, as I hope he knows by now, we have deep dialogue across a number of jurisdictions. That is an ongoing process. If I think about the work we are doing with Brazil, India and China and the dialogues we are having with Switzerland, there is no end to this Government’s ambition to improve our financial services’ relationships and deepen the opportunities that Brexit has given us.”
“The Government are committed to helping people own their own home. Our new mortgage guarantee scheme is increasing the availability of mortgages for credit-worthy households who only have a 5% deposit, helping them realise their dream of home ownership. The lifetime ISA provides a bonus to those under 40 saving towards a home, worth up to £450,000.”
“I thank my right hon. Friend for his question. The Government are investing more than £5 billion in building safety, including an additional £3.5 billion announced this year for the remediation of unsafe cladding for all leaseholders living in high-rise residential buildings. We are also introducing a new tax on the UK residential property development sector and a new levy on developers of certain high-rise buildings to help pay for cladding remediation costs.”
“My hon. Friend is absolutely right. Since the scheme has been up and running—as he says, it has been a matter of only a few weeks—we have seen the provision of 95% mortgages expand from just five to 192. This is a significant change, and I am grateful to the industry for the moves that it has made, with Government support.”
“The Government recognise that cash is crucial to the daily lives of millions of individuals and businesses across the UK, and we have committed to legislate to protect access to cash. The Government made legislative changes to support the widespread offering of cashback without a purchase by shops and other businesses in the recent Financial Services Act 2021 and this summer we will consult on further legislative proposals for protecting cash for the long term.”
“I can commit that we will look very carefully at the evidence on the best possible interventions to make. I am pleased that, as of March 2020, 98% of the population could access free cash within 3 km, but we have to come to terms with the fact that from 2009, when 56% of transactions were by cash, we were down to 17% by last year. We have to come up with appropriate legislation to meet that change.”
“I congratulate the hon. Lady on her recent elevation. I take her points on board, but this is a complex area. There will need to be a range of interventions from industry, working with regulators. The LINK scheme already has a £5 million fund to help areas of great deprivation and provide extra access points for cash, but we need to recognise that technology will have to play a significant role. We will also use the extensive network of 11,500 post offices to make good on our pledge to ensure that access to cash remains available across the country.”
“It is absolutely clear that there are significant lessons for the FCA to learn from the Gloster review, and I have regular conversations, including just last week, with the new chief executive on the transformation programme. He has employed five new senior executives to drive that programme forward urgently, and I look forward to seeing the results of that intervention.”
“My hon. Friend rightly recognises the value of the TIGRR report, which we received last week, and we will be looking very carefully at those recommendations. In addition, my right hon. Friend the Chancellor chairs the better regulation committee, which has been established to drive forward a new strategy to deliver better regulation outside the EU. There is a lot of work to be done, but progress is being made.”
“Member for Strangford (Jim Shannon) for contributing to a wide-ranging discussion of the issues facing this country’s financial services sector. Clearly, engagement will be crucial to help the UK financial services sector fulfil its full potential. I have been meeting industry actors very regularly and will continue to do so, so that I can understand how this Government can support them to achieve their goals, and I look forward to pursuing that work further. I am very grateful to my hon. Friend for raising the points that he has this evening. Question put and agreed to .”
“Undoubtedly, the future of the UK financial services sector is linked to the future of our planet, and that connection is clearer than ever as we prepare to host COP26 in November. I mentioned earlier that building a greener industry is a key element of our vision for financial services, and that is why a central focus of the COP26 finance campaign will be to ensure that every professional financial decision takes climate change into account. Furthermore, we believe that financial services have an important part to play in helping us to level up the country by generating jobs and growth, and we are focused on unlocking the hundreds of billions of pounds sitting with UK institutional investors to drive our country forward. I thank my hon. Friend the Member for Hitchin and Harpenden and the hon.”
“I fully recognise my hon. Friend’s interest in capital and wholesale markets. We want to help businesses to list and grow on stock markets in the UK when they are ready. We have therefore announced how we will take forward each of the recommendations addressed to the Treasury in Lord Hill’s recent listings review. I thank Jonathan Hill, my constituent, for the enormous amount of work that he put into that review. We expect to consult on detailed policy proposals in the summer, including proposals to delete the share trading obligation and double volume cap, but rest assured, we will aim to deliver a rulebook that is fair, outcomes-based and supports competitiveness, while ensuring that the UK maintains the highest regulatory standards.”
“As I outlined in my written ministerial statement in April, the Government and the regulators have confirmed a number of actions in response, including help for FinTech firms to recruit the best talent through our new scale-up visa scheme to attract global talent and boost the FinTech workforce; a regulatory scalebox that will enhance support for early-stage FinTech firms and allow them to grow as quickly as possible; the Treasury and the Bank of England’s new central bank digital currency taskforce to co-ordinate the exploration of a potential UK CBDC; Government support for an industry-led centre for finance, innovation and technology; and an initiative from the Department for International Trade to support UK FinTech firms to expand internationally and encourage overseas firms to establish a presence in the UK.”
“We agree that greater responsibility for regulators should be balanced with appropriate democratic policy input and oversight from Government and Parliament. I turn to FinTech. When it comes to our vision for a more technologically advanced financial services sector, we are focused on helping our FinTech industry to stay at the cutting edge of global innovation. My hon. Friend asked about the implementation of the Kalifa review’s recommendations.”
“Friend rightly highlighted the importance of our future regulatory framework review; I welcome the important contribution of his all-party group and its recent report to this important debate. Let me remind the House of the details of the Government’s review: it explores the reforms needed to tailor our regulations to life outside the EU, and aims to establish an approach to financial services regulation that meets the specific needs of UK firms, markets and consumers. I stress that Parliament will continue to have a vital role in shaping the financial services regulatory landscape. We believe that appropriate democratic accountability and scrutiny of the regulators is vital for an effective and legitimate regulatory framework.”
“The changes resulting from the review will therefore be legislated for in the Finance Bill 2021-22 and will have effect from the same time as the increase to the main rate of corporation tax. At no point will the banks be subject to a tax rate on their profits at or near 33%. As well as working to ensure international competitiveness, we also have an extremely busy domestic agenda. Among our main areas of focus is getting the right regulation in place to take advantage of our new position outside the institutional frameworks of the EU. We are committed to upholding the UK’s high regulatory standards while ensuring that we maintain our position as a global financial hub, but we have an opportunity to do things differently. My hon.”