Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2017 — House of Lords, 2017-03-23
Topic: Domestic Commerce
Bryan Davies (Labour, Centre-left): My Lords, I apologise to the Minister for failing to contact her yesterday and give her some indication of one or two of the anxieties that I had about the order, but I am afraid that the disruption that affected the Palace also affected my liaison. Consequently, I was not able to warn her of what is to come. Nevertheless, I am sure she will be able to answer the points I make with great facility, as she usually does, or, if not, perhaps she will write to me in due course on the issues which are not covered Of course, we support MiFID II and bringing it into our national law. It entrenches consumer protection. If we learnt one thing from the financial crash of 2008, it was the need to guarantee consumer protection in the most adverse circumstances. MiFID is a European response to that worldwide crisis, which affected our colleagues in Europe as it did us here in Britain. I appreciate the fact that the Minister has brought the instrument forward The consultation for the Government’s transposition plans revealed that, along with this order, two further statutory instruments were required in order to deliver MiFID II: the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations and the data reporting services regulations. When can this House expect to scrutinise and debate those instruments? They are a crucial part of the package. As the Minister will appreciate, they have at least an indirect impact on the workings of the instrument in front of us today—I am thinking particularly of the extended regulatory provisions and their subsequent impact on the FCA and PRA. Given this, perhaps it would have been more helpful to debate all three instruments in the round, but we are making progress on this one first The public consultation on transposing MiFID closed in June 2015, nearly two years ago. The Economic Secretary to the Treasury, when moving this order in the other place, stated that, "last month we concluded our consultation on the legislation needed".—[Official Report, Commons, Second Delegated Legislation Committee, 14/3/17; col. 1.] What were those discussions, who were they with and why did they last so long? Where are the documents on those proceedings, which, as far as I know, are not available to your Lordships’ House We of course support the supervision of binary options being transferred from the Gambling Commission to the Financial Conduct Authority. We agree that they are financial instruments and as such the FCA is clearly better placed to regulate their use. When does the Minister expect the FCA to produce its guidance, particularly about how it intends to protect potentially vulnerable consumers? The Minister will clearly appreciate that consumers need full disclosure about the product they are purchasing and we need the greatest clarity. Related to this, the consultation document says: "Ahead of the legislation coming into force, the Government will consider whether consequential amendments to the Gambling Act 2005 are necessary in order to support the transfer of the regulation of relevant binary options from the Gambling Commission" I was somewhat involved in the Gambling Act. The experience does not rate enormously highly on the list of my joys in speaking in this House and introducing legislation, so I am very glad to see that the Government are taking a very different view in this instance The consultation document goes on to say that further consideration will be given to the fee arrangements for firms that hold a Gambling Commission licence and to the implications of these legislative amendments for the relevant tax framework. Again, I do not expect an immediate, full answer today—perhaps I will get one—but I hope we will get an indication as to the progress that is to be made. Can the Minister say where the Government are on these issues, given that they are not included in the order? I am sure that firms will be grateful for clarification as to where they will stand when this legislation comes into force I feel particularly guilty about dropping my last question on the Minister at this point, but she has enormous support and great experience and she will handle it readily. I would have given her notice had I not been so disrupted by events yesterday. An issue was raised in the Explanatory Memorandum which accompanies this order. It says: "The Treasury is working closely with representatives from local government and the FCA in order to mitigate the possible effect on local government’s participation in financial markets" Yet we have not been able to find anywhere in the impact assessment or the consultation document what the Government expect those effects to be. Is the Minister in a position to outline the key monetised and non-monetised issues involved in the transposition of MiFID II for local government in this country? What discussions have taken place between local government representatives and the Treasury My final point relates to costings. The estimated annual net cost to business has been calculated at £105.2 million, while the impact assessment states that the direct impact on business will be £148.5 million. Can the Minister clarify the disparity between these two figures?