Lord Pitt-Watson (Lab)

My Lords, growth is the top priority for the Government, and the financial services sector is key to delivering this. As my noble friend Lord Stockwood set out in Committee, the Government always intended that the FCA’s long-term strategy would set out its priorities for advancing its international competitiveness and growth objectives. The noble Baroness, Lady Noakes, rightly questioned if our legislative drafting was clear and, after further consideration, the Government have tabled this amendment to ensure that the law is clear on this point. I thank the noble Baroness for bringing this matter to our attention. I turn to Amendments 32 and 33 which would place detailed statutory requirements on the content of the FCA’s and PRA’s long-term strategies, including requiring descriptions of future regulatory initiatives, indicative timelines and assessments of potential trade-offs. The Government agree that this is an important part of Parliament’s role in scrutinising the work of the regulators. I welcome the commitments made by Nikhil Rathi, the CEO of the FCA, in a letter he sent to me on 2 September, which has been shared with the Lords Financial Services Regulation Committee, the Opposition Front Bench and interested Peers. The letter made a commitment to pro-actively engage relevant parliamentary committees on their priorities before settling future strategies. Katharine Braddick, the new CEO of the PRA, also made commitments in her letter of 3 September to engage its stakeholders and Parliament in the development of its strategy. As I committed to earlier in today’s debate, I am placing these letters in the Library. Much of the information that the noble Baroness seeks is, or should be, already available through existing channels, including the Regulatory Initiatives Grid, which is updated regularly and is specifically designed to provide firms and stakeholders with forward-looking information on forthcoming regulatory activity. The FCA also publishes and will continue to publish an annual work programme that details what it will deliver in the coming year against the strategic priorities in its current strategy. The purpose of the long-term strategy is different. It is intended to set out the regulator’s strategic direction and priorities over a five-year period, rather than to operate as a detailed business plan. As the FCA sets out in its letter, the strategy is intended to provide greater clarity and predictability about its priorities, and to provide a strong basis on which Parliament and others can hold it to account for its performance against those priorities. The Government therefore do not consider that these additional statutory requirements are necessary. I now turn to Amendment 68, which seeks to create new statutory offices for regulatory evaluation within the FCA and the Bank of England. I recognise the concerns expressed during Committee about ensuring that Parliament has access to meaningful information about the performance of the financial regulators. It is a point well made. This amendment would go further than this. It would establish permanent statutory bodies with dedicated directors, governance arrangements and reporting requirements, introducing additional costs on the regulators. As we discussed in Committee, there already exists a range of mechanisms to provide this information. This proposal could potentially duplicate these arrangements, and the Government do not agree that more institutional machinery will necessarily lead to better scrutiny.