Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 — House of Lords, 2022-07-05
Topic: Domestic Commerce
Denis Tunnicliffe (Labour, Centre-left): My Lords, I thank the Minister for introducing these regulations. They build on the Financial Services Act, which was generally not contentious legislation. Arguments took place about the transparency of rule-making by the regulators, but the introduction of the investment firms prudential regime and several other changes were seen as sensible steps forward One suspects that the forthcoming financial services and markets Bill will be slightly more controversial. Much media speculation about the forthcoming Bill suggests that it will simply deregulate, rather than regulate in a smarter way. Our departure from the EU undoubtedly presents opportunities for our world-leading financial services sector. However, we must not put the stability of the sector at risk in the pursuit of relatively marginal gains. Many of the protections put in place after the 2008 global crisis were sensible. Financial institutions have become accustomed to them. They provide confidence to customers. When we see the Bill, I hope that they will not have been swept away. That would expose the Government and the public to unnecessary risk Turning back to the regulations before us today, I am pleased to say that we are generally supportive. They contain largely technical amendments to ensure that IFPR, Basel III bail-in procedures and securitisation regulations operate more effectively in the UK context. We have played a leading role in developing many of these policy frameworks at the international level, whether as an EU member state prior to our exit or as a member of other organisations and committees Can the Minister comment on how the Treasury and regulators will be assessing and reporting on the impact of the various changes once they have taken full effect? What, if any, role will there be for Parliament, beyond the day-to-day work of Select Committees, for example, as these impacts become apparent? Can she also comment on the anticipated timescale for the implementation of Basel III.1? We expect consultation on the final part of the framework shortly, but can she confirm whether it is the intention to implement reforms alongside international partners? If that is the case, what would happen if another key jurisdiction, such as the European Union, were to postpone its implementation date I turn to other areas covered by the regulations. Can the Minister comment on what work is being undertaken to assess the impact of current bail-in procedures and thresholds on mid-tier and challenger firms? UK Finance has called for changes to the threshold for smaller banks, as well as a sliding scale depending on institutions’ total assets. Is the Treasury looking at these suggestions in partnership with the regulators? Might we see something on this topic in the forthcoming primary legislation Finally, this statutory instrument corrects a number of deficiencies in retained EU law that were not identified during earlier tidying-up exercises. There is a consistent theme across different policy areas: departments prioritised changes to the retained law that were day-one critical, setting aside less fundamental tweaks until appropriate vehicles became available. Should we expect further corrections to retained EU law in future SIs, or is the Treasury confident that all deficiencies have now been captured? Have there been any practical issues for either the regulators or the financial institutions as a result of the failure to correct deficiencies in a more timely manner? How do these amendments fit into the Minister for Government Efficiency’s drive to repeal vast swathes of retained EU law In this field, many instruments contain essential technical information. They were not, as is often stated, forced upon us; rather, they came out of processes led by UK Ministers. With that in mind, can the Minister confirm whether the Treasury has been given any targets to reduce the volume of its retained EU law by the Cabinet Office? If so, what will that process look like?