Charities (Protection and Social Investment) Bill [HL] — House of Lords, 2015-07-20
Topic: Domestic Commerce
James Bridges (Conservative, Centre-right): My Lords, first, I apologise to the noble Baroness, Lady Barker, and others for my slight confusion over the previous amendment. I seem now to be a bus or a bus conductor—I am not sure which—but I hope to bring a smile to my noble friend Lord Hodgson’s lips As my noble friend says, the amendment aims to insert a new section into the Charities Act to exempt charities from the FCA’s financial promotion rules and to give the Treasury a power to create a new regulatory regime for charities marketing financial promotions, taking this out of the hands of the FCA. This amendment was tabled by noble Lords in Committee. I repeat what I said then: I understand that the effect of the financial promotion regime is an important issue for charities and social enterprises looking to raise funds from the public in this particular way. I also understand that my noble friend’s amendment is prompted by concerns around the appropriateness of these rules for charities that want to raise investment funds from members of the public, just as they might ask for donations The amendment suggests that the Treasury should become the regulator, and may be probing in that respect—indeed, I am sure it is. However, I believe that the model of independent expert regulation by the FCA is the right one. That said, it is of course in all our interests that any regulation is proportionate, consistent and clear. As my noble friend knows well, the Government are supportive of social investment and very keen to ensure that regulation is proportionate for the charities and social enterprises involved and, crucially, for the consumers who want to invest in these products. Indeed, very valuable changes were made to the remit of the FCA in 2012 to give it duties to have regard to the desirability of sustainable economic growth and to the differing needs of different types of organisations it regulates, including those of charities and social enterprises. None the less, I am aware of the ongoing concerns about regulatory approaches to retail social investment, and the Government are committed to doing anything they can to remove any unnecessary burdens, while of course not eroding consumer protection or the integrity of the financial system As my noble friend said, following Committee, I met my honourable friends the Economic Secretary to the Treasury and the Minister for Civil Society to discuss the issues around financial promotions and social investments that were raised by my noble friend Lord Hodgson in Grand Committee and supported by a number of other noble Lords. We agreed that the model of independent expert regulation by the FCA is the right one and that consumer protection must be paramount. It is therefore important to ensure that the current regime supports social investment rather than looking to shift responsibility to the Treasury. We also agreed that the Treasury and the Cabinet Office will write jointly to the FCA to consider regulatory approaches to how members of the public make social investments, with a specific focus on the financial promotion rules As I mentioned in Committee, the Government and the FCA have been working with the sector to consider evidence about the effectiveness of the regime, and this work will continue. The important issues raised in these debates will of course be considered as part of these discussions with industry and the FCA. I believe we are making progress and, as I said, my honourable friend the Economic Secretary to the Treasury will be writing to my noble friend, as well as the other noble Lords who raised this important issue, to update them on progress. In the light of this, I hope my noble friend will think that a bus may have at last arrived and will understand that work is ongoing in this area. On that basis, I invite him to withdraw his amendment.