Member of Parliament for the Cities of London & Westminster Nickie Aiken made the following speech during the Second Reading of the Financial Services Bill Today.
While happy with the Bill in general Nickie sought clarity on two specific clauses.
Nickie Aiken MP - I am grateful for the opportunity to speak in this debate and to highlight, as other hon. Members have, the invaluable contribution that the financial and professional services industry makes to UK plc: more than 60,000 companies providing 2.3 million jobs and 10% of the UK’s overall gross value added. While two thirds of those jobs are outside London, I must stand up for my constituency by saying that the City of London alone contributes approximately 25% of the sector’s GVA.
I have spoken to businesses and business groups in the City of London, who are broadly in favour of the Bill’s overarching objectives. They want to see an efficient regulatory framework after our transition from the EU and would welcome in particular changes that help to ensure the UK’s regulatory regimes are more coherent and attractive to international firms. They also strongly believe that the new regime must maintain the highest of global standards to maintain the sector as a strategic national asset and ensure sound capital markets. Businesses also welcome the clear way in which the Treasury and my hon. Friend the Economic Secretary to the Treasury have sought their views in coming to their position and are keen to maintain a dialogue as the Bill and the future regulatory framework review progress.
I will turn, if I may, to address the specific content of the Bill. Businesses in my constituency are supportive of the Bill’s objective to enhance the UK’s world-leading prudential standards and promote financial stability, but they would appreciate clarity from the Government on specific clauses. In particular, with regard to the implementation of Basel III, as some businesses have been working towards the implementation of EU capital requirements regulation 2, further guidance would be welcome on how the UK regime may differ from the EU regime. With regards to the LIBOR wind-down and benchmarking, again I urge the Government to ask the FCA to provide the further detail and clarity that businesses require as soon as possible.
I turn to how the Government intend to promote openness between the UK and international markets. The businesses I spoke to in my constituency again welcome the changes, but, crucially, they would also welcome further clarity on how the Treasury intends to make equivalence decisions under the new frameworks. Business would also welcome assurances from the Government that they will continue to look to improve the UK’s global competitiveness. I would like the Bill to be more explicit in that area and expressly signal the objective to maintain and even expand our competitiveness on the world stage. I hope the Government will continue to work with the financial sector to ensure that that crucial aspect can be developed in relation to further rules and, in particular, when considering differing international tax regimes and access to talent.
I turn to the Bill’s third objective: maintaining the effectiveness of the financial services framework and sound capital markets. These provisions have been broadly welcomed. As businesses in my constituency know that an effective financial services framework has a significant impact on both business and customers, ensuring clarity in regulation and providing sound support mechanism for customers must be welcomed. However, the Bill also enshrines significant powers in regulators. I ask Ministers to consider whether they are satisfied that existing appeal mechanisms are sufficient. Will they increase the level of autonomy given to regulators? May that be worthy of consideration in the House at another time? In that vein, I would welcome from the Government a financial services strategy for the sector. That may enable arm’s length financial regulators to ensure that they interpret the “have regard to” objectives in the context of the Government’s vision for the sector.
Finally, in the light of the ongoing covid-19 crisis, the objective of maintaining sound capital markets should not be underestimated or forgotten. The capital market provides a vital source of funding for businesses, alongside the lending market. The measures in the Bill will help to support a market that is vital to the re-energising of the economy post-COVID.
I encourage the Government to consider, with one eye to the future, how the Bill demonstrates UK leadership in addressing digital and sustainability-related regulatory challenges, because although a recovery from COVID may dominate the short-to-medium term, the continued development of FinTech and our response to the global climate crisis will surely be long-term considerations for the financial sector.
The Bill should be welcomed as a necessary but early step as we leave the EU, but a fuller, more comprehensive overhaul of the UK’s regulatory framework is required to ensure that the UK—and in particular the City of London in my constituency—retains its competitiveness as a global financial centre. I look forward to working with businesses and Treasury Ministers throughout the passage of the Bill and the others that will surely follow to implement the necessary changes to ensure just that. I commend the Bill to the House.
You can watch video of Nickie’s contribution to the Bill’s Second Reading above.