Contribution
I thank my right hon. and learned Friend the Minister for her work in bringing the Bill to Parliament, and the other place for its scrutiny to date. I should begin by making it clear that before being elected, I worked in supervision at both the Prudential Regulation Authority and the financial market infrastructure directorate at the Bank of England. I associate myself with some of the comments others have made about the importance of the financial services industry not just to London, but to the whole of the UK.
I would like to begin by welcoming the Government’s retention of the proportionality requirements, following debate in the House of Lords. Although I worked on the larger financial companies when I was a frontline supervisor, the proportionality lens was very important in day-to-day decision making, alongside a robust risk framework, not least because as the person who had to deliver a message to a firm, I needed to make sure that I could justify it. In line with that risk-based and proportionate approach to supervision, which I believe is the right one, I wonder if the Bill could make more of the opportunity to stimulate growth in the commercial and specialty insurance markets.
The London insurance market is a world leader, with annual income larger than its five closest competitors combined. It insures everything from planes to nuclear power stations, and has an important role to play in helping the Government to tackle climate change, protect against cyber-threats and unlock investment across the UK. As others have said, it competes internationally against markets in places such as New York, Singapore and Hong Kong. Its market is for sophisticated corporate clients, professional investors, insurance firms, banks and pension funds, rather than the individual purchasing travel insurance ahead of a holiday or pet insurance for the family dog, but currently the supervisory approach is rather similar for those very different types of customers.
Will the Minister and the Government consider whether more could be done in the Bill to differentiate the way we supervise wholesale insurance markets that have professional clients versus retail markets, where the focus, quite rightly, is on protecting the individual consumer? An obvious example to follow would be Australia, the country of my birth, which makes that distinction between wholesale and retail insurance through the Australian Corporations Act 2001, and tailors its supervision accordingly. There is scope in the Bill to consider what a UK version of that approach could look like to ensure that regulation is proportionate while maintaining strong protections where they are most needed.
I support the Government reintroducing the power to be able to act quickly after the access to banking services review reports, but hope that when it is reintroduced it will be narrower in scope to address the concerns raised in the other place that saw the original provision removed from the Bill. It is also important that any action that follows from that review is properly consulted on.
In my constituency, my initial efforts to get a banking hub were frustrated by the focus on access to cash under the current rules, when it is really access to face-to-face banking, advice and services that my constituents want to have, particularly on the Strood side of the River Medway and in the more rural populations on the Hoo peninsula. Digital inclusion is very important for people of all ages, but we know that the over-65s in particular place a lot of value on face-to-face banking services and it is important that they do not lose out. Age UK statistics from September suggest that 1.4 million over-65s are fully digitally excluded. Banking hubs can be part of the digital inclusion plan if we follow the example of places such as Singapore, which I know from a recent visit with the Public Administration and Constitutional Affairs Committee has very high levels of digital take-up and success using hubs to assist older citizens with building their confidence in using digital services for banking and public services.