Financial Services Bill — House of Lords, 2021-04-14
Topic: Domestic Commerce
Joanna Penn (Conservative, Centre-right): My Lords, Amendment 14A makes a minor change to the market abuse regulation to ensure that the Financial Conduct Authority is able to continue to effectively identify, investigate and prosecute complex cases of market abuse The market abuse regulation, commonly known as MAR, aims to increase market integrity and investor protection, which enhances the attractiveness of the UK market for investors. It contains prohibitions on insider dealing, unlawful disclosure of inside information and market manipulation, and provisions to enable the FCA to identify, investigate and take action against such market abuse Article 28 of MAR provides that personal data collected for the purposes of MAR is to be retained for a maximum period of five years. The market abuse regulation was introduced as an EU regulation in 2014 and so forms part of retained EU law in the UK following our withdrawal. Article 28 applied from July 2016 and so, without this amendment, from July 2021 the FCA would be obliged to begin deleting five year-old personal data collected under the regulation This requirement in MAR is inconsistent with other references to data protection in EU financial services regulation and the approach to personal data retention in data protection regulation, particularly the general data protection regulation, or GDPR. An obligation to delete personal data after five years would cause problems for the FCA when carrying out its market monitoring and enforcement duties The FCA needs to retain personal data for longer than five years for three reasons: first, to investigate complex market abuse such as that carried out by organised criminal groups, which can typically occur over a prolonged period of time; secondly, to prosecute those complex cases—prosecutions will draw on evidence from longer than five years ago; and, finally, to enable the FCA to discharge its disclosure duties in prosecution cases by providing relevant information to the defendants that may support their case. In some cases, the obligation to delete personal data after five years could obstruct the FCA and prevent it carrying out investigations and commencing prosecutions. This is of particular concern when it comes to preventing, investigating and prosecuting complex market abuse undertaken by organised crime groups, which can often take place over five years. For example, in a well-publicised recent case a conviction of insider dealing was confirmed on appeal in December 2020, resulting in custodial sentences and £3.9 million in confiscation. During the 2020 appellate proceedings, the FCA had to disclose information from 2013. The conviction may not have been secured if the FCA had been forced to delete the personal data relating to the case The Government therefore consider that it is appropriate to remove the requirement in MAR to delete personal data after five years. If it is removed, the FCA will be required to adopt a GDPR-compliant retention policy for data collected under MAR, consistent with its treatment of personal data collected for other regulatory, compliance and operational purposes. This will enable the FCA to keep personal data so long as it is necessary for the enforcement of MAR, including identifying, investigating and then prosecuting these cases of complex market abuse I recognise that this amendment has been tabled at a late stage of the Bill, and it would have been preferable to include it earlier. After such a large body of EU legislation was transferred to the UK statute book at the end of the transition period, the Government have been working closely with the FCA to identify any issues. This issue was identified as one that requires urgent attention to ensure the FCA is able to effectively pursue its investigations into potentially criminal conduct I know that the importance of investigation and addressing potential market abuse was raised by many noble Lords during debates in Grand Committee. I therefore ask that noble Lords support this amendment to ensure that the FCA is not prevented from using personal data that would support it in identifying, investigating and prosecuting cases of market abuse. I beg to move.