The Financial Services and Markets Bill [HL] is a wide-ranging bill that aims to reform the way the UK financial services sector is regulated. This briefing provides a summary of the bill’s second reading and committee stage in the House of Lords ahead of its further consideration at report.

The Financial Services and Markets Bill [HL] is a wide-ranging bill that aims to reform the way the UK financial services sector is regulated. This briefing provides a summary of the bill’s second reading and committee stage in the House of Lords ahead of its further consideration at report.

New clause 50 debated and negatived on division (4 to 9). New clause 51 debated and withdrawn. New clause 52 negatived on division (1 to 9). New clause 56 negatived on division (1 to 9). New clause 57, discussed with new clauses 58 and 104, debated and withdrawn. New clause 66 debated and negatived on division (4 to 8). New clause 72 debated and negatived on division (2 to 9). New clause 76 negatived on division (1 to 13). New clause 77 debated and withdrawn. New clause 81, discussed with new clause 82, debated and negatived on division (4 to 9). New clause 82 negatived on division (4 to 9). New clause 83 debated and negatived on division (4 to 10). New clause 84 negatived on division (5 to 9). New clause 85, discussed with new clause 98, debated and negatived on division (5 to 9). New clause 86 debated and negatived on division (4 to 9). New clause 87, discussed with new clause 113, debated and negatived on division (5 to 9). New clause 96, discussed with new clause 97, debated and withdrawn. New clause 97 negatived on division (5 to 9). New clause 98 negatived on division (5 to 9). New clause 99 debated and negatived on division (4 to 9). New clause 101 debated and negatived on division (4 to 9). New clause 104 negatived on division (5 to 9). New clause 105, discussed with new clause 106, debated and negatived on division (4 to 9). New clause 106 negatived on division (4 to 9). New clause 108, discussed with new clause 109, debated and withdrawn. New clause 109 negatived on division (5 to 9). New clause 112, discussed with new clauses 110 and 111, debated and negatived on division (4 to 9). New schedule 1 agreed to. Clauses 68 and 69 agreed to. Clause 70, as amended, agreed to. Amendment 37 to clause 71 negatived on division (4 to 9). Amendment 38 to clause 71 negatived on division (4 to 9). Amendment 39 to clause 71 negatived on division (5 to 9). Clause 71, as amended, agreed to. Clause 72 agreed to. Bill, as amended, to be reported (Bill 131). Written evidence reported to the House.

New clause 50 debated and negatived on division (4 to 9). New clause 51 debated and withdrawn. New clause 52 negatived on division (1 to 9). New clause 56 negatived on division (1 to 9). New clause 57, discussed with new clauses 58 and 104, debated and withdrawn. New clause...

Lords committee stage sixth day. Clauses 39 to 53 agreed to. Bill reported without amendment.

Lords committee stage sixth day. Clauses 39 to 53 agreed to. Bill reported without amendment.

My Lords, our amendments in this group concern the future of the bank ring-fencing regime. I will start by setting out clearly the position that we have reached as the Official Opposition. Through our diagnostic work, we have found a consensus that the bank ring-fencing regime is no longer fit...

My Lords, our amendments in this group concern the future of the bank ring-fencing regime. I will start by setting out clearly the position that we have reached as the Official Opposition. Through our diagnostic work, we have found a consensus that the bank ring-fencing regime is no longer fit...

My Lords, if I may respond to that, I had thought until recently that what we were debating was a response to the Skeoch commission established by the last Government, but we have new amendments now, it seems—Amendment 160A and the abandonment of clauses—that are really throwing ring-fencing out. I...

My Lords, if I may respond to that, I had thought until recently that what we were debating was a response to the Skeoch commission established by the last Government, but we have new amendments now, it seems—Amendment 160A and the abandonment of clauses—that are really throwing ring-fencing out. I...

In Committee, it is normal to address the amendments and not opposition parties’ policy documents.

In Committee, it is normal to address the amendments and not opposition parties’ policy documents.

The amendment has been put to us at the last minute. The points that it relates to have been there for weeks, indeed months, but I would argue that what has triggered the amendment is the speech by the leader of the Conservative Party and the policy document that underpins...

The amendment has been put to us at the last minute. The points that it relates to have been there for weeks, indeed months, but I would argue that what has triggered the amendment is the speech by the leader of the Conservative Party and the policy document that underpins...

I rise to speak to the Motion that Clause 40 does not stand part. As I explained at Second Reading, I have no professional knowledge of the banking industry but, because of circumstances, for more than 14 years I have been in this Room talking about the finance industry and...

I rise to speak to the Motion that Clause 40 does not stand part. As I explained at Second Reading, I have no professional knowledge of the banking industry but, because of circumstances, for more than 14 years I have been in this Room talking about the finance industry and...

I support Amendment 160A. I want to start by briefly addressing a couple of issues raised by the noble Lord, Lord Pitt-Watson. Most importantly, I want briefly to quote the conclusions of the Skeoch report. The panel judges that the ring-fence

“is worth retaining at present”

but adds a number of considerations:

“The...

I support Amendment 160A. I want to start by briefly addressing a couple of issues raised by the noble Lord, Lord Pitt-Watson. Most importantly, I want briefly to quote the conclusions of the Skeoch report. The panel judges that the ring-fence

“is worth retaining at present”

but adds a number of considerations:

“The...

I did indeed talk to senior members of the Skeoch commission before writing my speech, and what I said is completely consistent with the conclusions of the Skeoch commission, which was set up by the previous Conservative Government, as I said.

I did indeed talk to senior members of the Skeoch commission before writing my speech, and what I said is completely consistent with the conclusions of the Skeoch commission, which was set up by the previous Conservative Government, as I said.

I am just reading the conclusions from the report, my Lords. They make it very clear that the continuation of ring-fencing made sense at the time the report was written, but the commission clearly envisaged that it might not be needed over the passage of time. I also remind noble...

I am just reading the conclusions from the report, my Lords. They make it very clear that the continuation of ring-fencing made sense at the time the report was written, but the commission clearly envisaged that it might not be needed over the passage of time. I also remind noble...

I find it difficult to believe that someone has told me that the withdrawal of Glass-Steagall, which took place 13 years before the global financial crisis, had no detriment to the American banking system. As I say, I have read the Skeoch report and discussed it with senior members of...

I find it difficult to believe that someone has told me that the withdrawal of Glass-Steagall, which took place 13 years before the global financial crisis, had no detriment to the American banking system. As I say, I have read the Skeoch report and discussed it with senior members of...

I also draw attention to the abolition of FOS, which the noble Lord mentioned. I draw the Committee’s attention to Amendment 172A, which discusses the changes proposed to FOS. It is to be abolished and replaced with something called the financial adjudication service, which is a broadly similar methodology to...

I also draw attention to the abolition of FOS, which the noble Lord mentioned. I draw the Committee’s attention to Amendment 172A, which discusses the changes proposed to FOS. It is to be abolished and replaced with something called the financial adjudication service, which is a broadly similar methodology to...

My Lords, I have some experience of ring-fencing as, in my capacity as the chairman of the risk committee of a major bank, I oversaw the implementation of ring-fencing. At that time, it was a significant risk to the bank that we would not be in compliance with the ring-fencing...

My Lords, I have some experience of ring-fencing as, in my capacity as the chairman of the risk committee of a major bank, I oversaw the implementation of ring-fencing. At that time, it was a significant risk to the bank that we would not be in compliance with the ring-fencing...

There were two points, one of which is that the Skeoch report says that the numbers given are not its numbers. The report is clear that whatever the cost of ring-fencing, it is not a cost to the economy—this is what the Vickers report said earlier

—and that, by removing...

There were two points, one of which is that the Skeoch report says that the numbers given are not its numbers. The report is clear that whatever the cost of ring-fencing, it is not a cost to the economy—this is what the Vickers report said earlier

—and that, by removing...

My Lords, I understand the point that the noble Lord is trying to make, but I argue that the risk of the taxpayer picking up the tab is now considerably lower, which means that it is reasonable to re-examine whether ring-fencing should be an ongoing part of the regime.

I was...

My Lords, I understand the point that the noble Lord is trying to make, but I argue that the risk of the taxpayer picking up the tab is now considerably lower, which means that it is reasonable to re-examine whether ring-fencing should be an ongoing part of the regime.

I was...

My Lords, it has been an unusual experience to have had a debate with two sides to it on the Bill; the Minister must be pleased about that. I am afraid that I sit firmly on the fence—indeed, on the ring-fence. I am in two minds on this issue. Ring-fencing...

My Lords, it has been an unusual experience to have had a debate with two sides to it on the Bill; the Minister must be pleased about that. I am afraid that I sit firmly on the fence—indeed, on the ring-fence. I am in two minds on this issue. Ring-fencing...

My Lords, I am delighted to have the debate, and I am very grateful to the noble Lord, Lord Pitt-Watson, for raising questions which have encouraged debate, but I support my noble friend Lady Neville-Rolfe’s opposition to Clause 39 standing part of the Bill. I also support her Amendment 160A...

My Lords, I am delighted to have the debate, and I am very grateful to the noble Lord, Lord Pitt-Watson, for raising questions which have encouraged debate, but I support my noble friend Lady Neville-Rolfe’s opposition to Clause 39 standing part of the Bill. I also support her Amendment 160A...

I wonder whether there might be some confusion here. The thing about the ring-fence is that there are activities within it that the Government are promising to bail out. Those things are being insured. By the way, the move in the ring-fence proposed by the Government will extend these a...

I wonder whether there might be some confusion here. The thing about the ring-fence is that there are activities within it that the Government are promising to bail out. Those things are being insured. By the way, the move in the ring-fence proposed by the Government will extend these a...

I thank the noble Lord, but it is about where the line is drawn in law, so that businesses can be certain and have predictability, because activities change day by day.

I thank the noble Lord, but it is about where the line is drawn in law, so that businesses can be certain and have predictability, because activities change day by day.

With respect, that is what Skeoch is recommending and what is being allowed in what we are being asked to accept here—there is an extension of the ring-fence. He is saying, “Look, there are other important activities that go beyond the ring-fence that are administratively complicated for the banks. Please...

With respect, that is what Skeoch is recommending and what is being allowed in what we are being asked to accept here—there is an extension of the ring-fence. He is saying, “Look, there are other important activities that go beyond the ring-fence that are administratively complicated for the banks. Please...

I thank the noble Lord, but he was speaking about 2022, which was light years away for the financial sector. Things have moved on and have changed. We have different regimes in place now. As my noble friend Lady Noakes has explained, the banks are now resolvable. There are other...

I thank the noble Lord, but he was speaking about 2022, which was light years away for the financial sector. Things have moved on and have changed. We have different regimes in place now. As my noble friend Lady Noakes has explained, the banks are now resolvable. There are other...

My Lords, I support Amendments 159 and 174 in the names of the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Altrincham. I would be concerned about abolishing the ring-fence for similar reasons and concerns as those expressed by the noble Lord, Lord Vaux. However, I believe that a...

My Lords, I support Amendments 159 and 174 in the names of the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Altrincham. I would be concerned about abolishing the ring-fence for similar reasons and concerns as those expressed by the noble Lord, Lord Vaux. However, I believe that a...

My Lords, I thought the Committee might like to be reminded why such a radical step as ring-fencing was taken after the 2008 financial crisis. It was in part because, in a universal bank encompassing both retail and wholesale banking, failure in the investment bank could and did destroy the...

My Lords, I thought the Committee might like to be reminded why such a radical step as ring-fencing was taken after the 2008 financial crisis. It was in part because, in a universal bank encompassing both retail and wholesale banking, failure in the investment bank could and did destroy the...

My Lords, I have enjoyed this exchange of views today. As the noble Lord, Lord Vaux, pointed out, it is refreshing and a little unsettling to find myself in the middle ground in a debate.

Before I turn to the specific amendments and stand part notices, it may be helpful if...

My Lords, I have enjoyed this exchange of views today. As the noble Lord, Lord Vaux, pointed out, it is refreshing and a little unsettling to find myself in the middle ground in a debate.

Before I turn to the specific amendments and stand part notices, it may be helpful if...

I am grateful to noble Lords who have contributed to this lively debate, and to the Minister for his response. I am grateful for the support I have received, particularly for my Amendments 159 and 174 and, from some of my noble friends, for Amendments 160A. While I agree with...

I am grateful to noble Lords who have contributed to this lively debate, and to the Minister for his response. I am grateful for the support I have received, particularly for my Amendments 159 and 174 and, from some of my noble friends, for Amendments 160A. While I agree with...

Moved by

Baroness Kramer

155: Clause 40, page 47, line 30, leave out from beginning to line 2 on page 48 and insert—

“(1) The appropriate regulator shall consider whether there is sufficient provision to ensure the effective provision to a ring-fenced body of services and facilities that it requires in relation to...

Moved by

Baroness Kramer

155: Clause 40, page 47, line 30, leave out from beginning to line 2 on page 48 and insert—

“(1) The appropriate regulator shall consider whether there is sufficient provision to ensure the effective provision to a ring-fenced body of services and facilities that it requires in relation to...

My Lords, this group originally preceded the one we just debated. I noticed the change this morning. My points in this group on ring-fencing are quite narrow. I am not particularly happy about the changes in Clauses 39 and 40, but I do not feel strongly enough that we need...

My Lords, this group originally preceded the one we just debated. I noticed the change this morning. My points in this group on ring-fencing are quite narrow. I am not particularly happy about the changes in Clauses 39 and 40, but I do not feel strongly enough that we need...

My Lords, I speak briefly to Amendments 155 to 158 and 160 in the name of the noble Baroness, Lady Kramer, and hope that she will forgive me as a former banker with cultural contamination, perhaps. I notice a lot of quite warm language about banking in this debate, with...

My Lords, I speak briefly to Amendments 155 to 158 and 160 in the name of the noble Baroness, Lady Kramer, and hope that she will forgive me as a former banker with cultural contamination, perhaps. I notice a lot of quite warm language about banking in this debate, with...

My Lords, Amendments 155 to 158 and 160 all relate to Clause 40. As I set out in the previous debate, Clause 40 makes the ring-fencing regime more flexible and proportionate by allowing the PRA to take account of protections already delivered elsewhere in the prudential and resolution framework, when...

My Lords, Amendments 155 to 158 and 160 all relate to Clause 40. As I set out in the previous debate, Clause 40 makes the ring-fencing regime more flexible and proportionate by allowing the PRA to take account of protections already delivered elsewhere in the prudential and resolution framework, when...

I am happy to withdraw.

I am happy to withdraw.

Moved by

Baroness Bowles of Berkhamsted

162: Clause 44, page 51, line 21, at end insert—

“(5) After section 284A insert—

“284AA Tax treatment of risk transformation arrangements

(1) The Treasury must, after consultation with the Commissioners for His Majesty’s Revenue and Customs, publish guidance concerning the tax treatment of investments issued in connection with...

Moved by

Baroness Bowles of Berkhamsted

162: Clause 44, page 51, line 21, at end insert—

“(5) After section 284A insert—

“284AA Tax treatment of risk transformation arrangements

(1) The Treasury must, after consultation with the Commissioners for His Majesty’s Revenue and Customs, publish guidance concerning the tax treatment of investments issued in connection with...

My Lords, this amendment is about insurance-linked securities—ILS—which are the UK’s version of fully funded risk transfer vehicles, which were legislated for in 2017. They include catastrophe bonds, collateralised reinsurance, sidecars and other fully funded mechanisms used by insurers to transfer peak and speciality risks to the capital markets. Catastrophe...

My Lords, this amendment is about insurance-linked securities—ILS—which are the UK’s version of fully funded risk transfer vehicles, which were legislated for in 2017. They include catastrophe bonds, collateralised reinsurance, sidecars and other fully funded mechanisms used by insurers to transfer peak and speciality risks to the capital markets. Catastrophe...

My Lords, I remind the House of my interest as an employee of Marsh, an FCA-regulated firm. I wish to speak in support of this amendment in the name of the noble Baroness, Lady Bowles, but before doing so, I would like to pick up briefly on something I said...

My Lords, I remind the House of my interest as an employee of Marsh, an FCA-regulated firm. I wish to speak in support of this amendment in the name of the noble Baroness, Lady Bowles, but before doing so, I would like to pick up briefly on something I said...

My Lords, I will speak to Amendment 162 in the name of the noble Baroness, Lady Bowles—perhaps from the Liberal Democrat risk-transfer derivative desk. This amendment raises what seems to be a sensible and practical point about certainty in the treatment of insurance-linked securities and related risk-transformation arrangements. Insurance-linked securities...

My Lords, I will speak to Amendment 162 in the name of the noble Baroness, Lady Bowles—perhaps from the Liberal Democrat risk-transfer derivative desk. This amendment raises what seems to be a sensible and practical point about certainty in the treatment of insurance-linked securities and related risk-transformation arrangements. Insurance-linked securities...

My Lords, risk transformation is a key element of the UK’s insurance market, and the growth of this market is critical to the Government’s objective of making the UK the location of choice for specialist and complex insurance. The Government’s reforms in Clause 44 aim to support this market by...

My Lords, risk transformation is a key element of the UK’s insurance market, and the growth of this market is critical to the Government’s objective of making the UK the location of choice for specialist and complex insurance. The Government’s reforms in Clause 44 aim to support this market by...

My Lords, I thank all those who have spoken in the debate. I must say that I find the Minister’s response rather disappointing. He is saying that the status quo is all right, but the status quo is not all right, so we will not have the business. I think...

My Lords, I thank all those who have spoken in the debate. I must say that I find the Minister’s response rather disappointing. He is saying that the status quo is all right, but the status quo is not all right, so we will not have the business. I think...

Moved by

Baroness Neville-Rolfe

163: After Clause 46, insert the following new Clause—

“Review of tokenisation in UK wholesale financial markets

(1) Within 12 months of the day on which this Act is passed, the Treasury must lay before Parliament a report on the development of tokenisation in UK wholesale financial markets.

(2) A report...

Moved by

Baroness Neville-Rolfe

163: After Clause 46, insert the following new Clause—

“Review of tokenisation in UK wholesale financial markets

(1) Within 12 months of the day on which this Act is passed, the Treasury must lay before Parliament a report on the development of tokenisation in UK wholesale financial markets.

(2) A report...

My Lords, I will speak also to Amendment 164 and thank my noble friend Lord Ranger of Northwood for his very interesting amendments. This is a really important group. It is

clear that digital assets are becoming an accelerating part of our financial and economic landscape, yet the Government, for...

My Lords, I will speak also to Amendment 164 and thank my noble friend Lord Ranger of Northwood for his very interesting amendments. This is a really important group. It is

clear that digital assets are becoming an accelerating part of our financial and economic landscape, yet the Government, for...

My Lords, I support my noble friend’s Amendment 164 and will speak to Amendments 164A, 164B and 164C in my name. I declare my interest as a non-executive director of Ecila.Group—an R&D-focused firm in digital assets and payments infrastructure. I am also a member of the UKUS Crypto Alliance and,...

My Lords, I support my noble friend’s Amendment 164 and will speak to Amendments 164A, 164B and 164C in my name. I declare my interest as a non-executive director of Ecila.Group—an R&D-focused firm in digital assets and payments infrastructure. I am also a member of the UKUS Crypto Alliance and,...

My Lords, it is a pleasure to follow my noble friend Lord Ranger of Northwood. I agree with all the amendments that he has eloquently described. I support my noble friend Lady Neville-Rolfe, and particularly her Amendment 163, to which I have added my name. The Government rightly talk about...

My Lords, it is a pleasure to follow my noble friend Lord Ranger of Northwood. I agree with all the amendments that he has eloquently described. I support my noble friend Lady Neville-Rolfe, and particularly her Amendment 163, to which I have added my name. The Government rightly talk about...

My Lords, we on these Benches in large part support the amendments in this group, with a few caveats. It is important to emphasise the frustration that we do not have today, and do not seem to see in the near future, that comprehensive regulatory framework that will draw together...

My Lords, we on these Benches in large part support the amendments in this group, with a few caveats. It is important to emphasise the frustration that we do not have today, and do not seem to see in the near future, that comprehensive regulatory framework that will draw together...

My Lords, I thank the noble Baroness, Lady Neville-Rolfe, and the noble Lords, Lord Altrincham, Lord Ranger of Northwood and Lord Holmes of Richmond, for these amendments and their contributions to this debate. It is an important discussion of how technology and finance will play an increasingly important role in...

My Lords, I thank the noble Baroness, Lady Neville-Rolfe, and the noble Lords, Lord Altrincham, Lord Ranger of Northwood and Lord Holmes of Richmond, for these amendments and their contributions to this debate. It is an important discussion of how technology and finance will play an increasingly important role in...

My Lords, I am very grateful to my noble friends Lord Ranger of Northwood and Lord Holmes of Richmond for their support and the amendments that they have tabled on this important topic of digital assets.

I am very glad to hear of the Woolard review of tokenisation and the progress...

My Lords, I am very grateful to my noble friends Lord Ranger of Northwood and Lord Holmes of Richmond for their support and the amendments that they have tabled on this important topic of digital assets.

I am very glad to hear of the Woolard review of tokenisation and the progress...

Moved by

Lord Holmes of Richmond

164E: After Clause 46, insert the following new Clause—

“Shared digital identity and compliance utilities

(1) The Secretary of State must, within 18 months of the day on which this Act is passed, publish a specification for—

(a) a shared digital identity utility (“the identity utility”), providing API-based identity...

Moved by

Lord Holmes of Richmond

164E: After Clause 46, insert the following new Clause—

“Shared digital identity and compliance utilities

(1) The Secretary of State must, within 18 months of the day on which this Act is passed, publish a specification for—

(a) a shared digital identity utility (“the identity utility”), providing API-based identity...

My Lords, it is a pleasure to open this group of amendments in my name. I can only apologise to the Committee that I did not manage to get through the full alphabet and require Roman numerals to be used after some of the amendments —perhaps when we come to...

My Lords, it is a pleasure to open this group of amendments in my name. I can only apologise to the Committee that I did not manage to get through the full alphabet and require Roman numerals to be used after some of the amendments —perhaps when we come to...

My Lords, I support my noble friend Lord Holmes’s amendments across the alphabet, particularly because he is right about the detail and the need for us to look at the ambition and see whether we are really targeting changes that will help us fulfil the ambition. When it comes to...

My Lords, I support my noble friend Lord Holmes’s amendments across the alphabet, particularly because he is right about the detail and the need for us to look at the ambition and see whether we are really targeting changes that will help us fulfil the ambition. When it comes to...