Financial Services and Markets Bill [HL]
Tuesday, 15 September 2026
Contributions
Third Reading
Northern Ireland and Scottish legislative consent sought . Relevant documents: 2nd and 8th Reports from the Delegated Powers Committee .
The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)
My Lords, I begin by making a short statement on the position regarding legislative consent on the Bill. Legislative consent from the Northern Ireland Assembly and the Scottish Parliament is required for Clauses 49 and 51, which concern crypto assets and their seizure and recovery by UK law enforcement. These relate in part to matters that are devolved matters in respect of Scotland and transferred matters in respect of Northern Ireland. The Government have written to the Northern Ireland Executive and the Scottish Government on this matter and my expectation is that these issues will be fully addressed during the Bill’s passage in the other place. We remain committed to sustained engagement with the devolved Governments for the remainder of the Bill’s passage. Clause 16: Requirements to have regard to the regulatory principles Amendment 1
Moved by
1: Clause 16, page 21, line 17, after “principles” insert “and the climate and environment regulatory principle” Member’s explanatory statement This amendment would require the FCA to have regard to the climate and environment regulatory principle (as defined in the amendment in the name of Lord Pitt-Watson to clause 16, page 21, line 39) when discharging its general functions.
Lord Pitt-Watson (Lab)
My Lords, in moving Amendment 1 I will also speak to the other government amendments tabled in my name. At Report and in Committee we discussed the fact that climate-related and nature-related risks can have significant implications for the economy, financial markets and long-term prosperity, and for the ability of the finance industry to do its job properly. We heard a number of calls to ensure that the financial services regulators continue to prioritise this agenda at a day-to-day level. However, it is important that this is done in a way that is aligned with the Government’s wider regulatory strategy and does not result in a new set of “have regards” which would further complicate the regulatory framework rather than make it simpler and more effective, as the Bill is intended to do. The amendments tabled in my name deliver on the commitment I made last week to require the FCA and the PRA to continue to have regard to their existing climate change and environmental targets regulatory principle at a day-to-day level and to maintain appropriate notification and reporting requirements as part of that. Amendments 1 and 3 amend Clause 16, formerly Clause 17, so that the FCA and the PRA must have regard to the climate and environmental targets principle when discharging their general functions. Amendments 5 to 8 ensure that the regulators must report appropriately on their consideration of the principle, including in annual reports and consultations. Amendments 2, 4 and 9 then ensure that certain references and definitions are correct and account for these changes. Put together, these amendments will ensure that the FCA and the PRA continue to have an appropriate focus on this vital issue. I beg to move.
Baroness Hayman (CB)
My Lords, I am extremely grateful to the Minister for the clarity with which he has introduced these amendments. I am even more grateful to him for the very great care and attention that he and his team of officials gave to the concerns that were raised across the House about not just the perception but the reality of what Clause 16, as previously drafted, would have done to the ability of regulators—and their duties and responsibilities—to take, within their day-to-day functions, proper cognisance of the risks to financial markets and industry, and to our economy, of changes in climate and in the natural environment. What we have managed to do is find a way forward that keeps within the bounds of what the Government intended in the regulation but does not sacrifice focus, given that, if nothing else, this summer gave us real experience of the effects that can happen through these issues. I am thinking particularly of the insurance industry and the housing market, and the effects that are already being felt there. It has been quite a struggle to get here and we have gone down some byways but, in the end, we have reached absolutely the right conclusion. I am extremely grateful to the Minister and absolutely support these amendments.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to briefly follow the noble Baroness, Lady Hayman, and to applaud the work of her and her allies that has got us to this place, as she said, after a great deal of struggle. One day, we will simply have these provisions arriving in the Bills without the need for struggle—we can but hope. I have one simple question to put to the Minister, which was inspired by attending “The People’s Emergency Briefing” on climate and nature in Gravesend on Saturday night. It was one of some 3,500 events held all around the country after the initial event in Westminster. We have yet to hear from the Conservative Front Bench, but House rumours suggest that the Opposition are going to oppose this amendment. If that is the case, would the Minister agree that they would benefit from seeing that briefing? I therefore ask the Minister—this is the first time I have asked under the new Prime Minister —whether the Government will organise a live national televised emergency briefing on climate and nature, as all these local events are asking.
Baroness Kramer (LD)
My Lords, my colleagues and noble friends Lady Sheehan and Lady Northover spoke eloquently on these issues on Report. If this amendment is pressed and the others are moved by the Government, we will support them.
Baroness Neville-Rolfe (Con)
My Lords, as this is Third Reading, I want to start by extending my warm thanks to the Minister and his team for their work on the Bill. I welcome the movement that the Government have shown on several of the issues that we have raised during the passage of this 137-page Bill, which in general we support. Chief among them is proportionality, which will continue to apply to the regulators in the exercise of their day-to-day functions. That change reflects concerns on all sides of the House; my hope is that it will help to reduce the burden on SMEs, so I thank the Minister for this. I also welcome the movement we have seen on the important issue of financial education and look forward to engaging on that. It is becoming ever more important, whether you are a pupil, a student applying for a loan, or an adult managing your finances or thinking about retirement. However, there remain important issues which the Government have not yet addressed sufficiently. Among them are the Henry VIII powers in Clause 3 and Clause 50 and the first use of the extensive new powers in the Bill. I understand the Government intend to reintroduce Clause 3 at a later stage in the Bill’s passage with further detail, and that is welcome, but it does not detract from the fundamental point at issue. One of Parliament’s principal functions is to scrutinise government legislation, and we simply cannot do so properly when Bills confer broad powers without setting out clearly how they are to be used. A digital asset strategy to support faster action to stop further loss of digital entrepreneurs and less aggressive use of Section 166 are two areas where we believe the Government should go further, because we have heard consistent concerns from industry. Turning to the amendments, I deeply regret the amendments the Government are introducing today on climate change. This represents a serious U-turn by the Government. Their original proposal was to move these considerations into five-year strategies. The existing requirements they dispensed with are largely superfluous and burdensome. There is little evidence that today’s amendments to restore them make any meaningful contribution, either to reducing climate change or to protecting the environment. At a time when businesses are already facing considerable pressure, and when our wider economic circumstances demand an unrelenting focus on growth, competitiveness and investment, imposing further needless regulatory burdens is the wrong direction of travel. I would also suggest that, for an economy as dependent as ours on international investment, these amendments send entirely the wrong signal. We should be demonstrating to investors overseas that the UK is a predictable and attractive market. Instead, they reinforce the perception that doing business here means ever more regulation, additional cost and greater complexity for no clear practical benefit. At Second Reading, the then-Minister, the noble Lord, Lord Stockwood, who I am glad to see in his place, said that the purpose of the Bill was to “modernise how the sector is regulated” and “enable it to grow ”.—[ Official Report , 8/6/26; col. 1146.] These amendments seem to run directly contrary to that objective. I am deeply disappointed that the Government have abandoned that principle so quickly and with so little resistance. We on these Benches have been consistent in our opposition to this duty, which we have made clear in the House and in discussions with the Minister. I shall seek to divide the House when the amendments are called.
Lord Pitt-Watson (Lab)
My Lords, I think there is wide agreement that finance is essential for the running of our economy and that we want the British finance industry to be as successful as possible. I think that few of us would think that climate finance was not one of the most important areas to which the industry needs to contribute. I think all of us would feel proud that our country, particularly London, is rated as the number one centre of green finance in the world. I understand the noble Baroness, Lady Neville-Rolfe, wanting to minimise regulation and thinking that this might be superfluous, but I note that climate is everywhere in the financial world. Why? It is because you are managing other people’s money. How does a fund manager, possibly with millions of people’s savings, think about appropriate investment? If you are responsible for the stewardship of a company, what is the sensible line to take in making sure it is as profitable as it can be but without risking the sustainability of the world? If you are an investment banker and somebody is issuing a bond, is it fair for it to be a green bond? Are you thinking about the reporting on the Stock Exchange? Should you have taken into account that the carbon assets you have will need to be written off and you will need to have a fund and tell your investors about that? Are you interested in impact investment? We were talking a lot about deforestation. How is it that we manage to get private money into deforestation? The noble Baroness, Lady Hayman, talked about insurance. Even in operations, look at the sort of thing that Bloomberg has done; all its electricity is now zero carbon. There is lots of stuff, and the UK is a leader. It is a growing area, and we should be proud of that. Does regulation make a difference to this? That is a good question. If you were to look at the UK’s regulation on this and compare it with that of the United States—London versus New York—you would be in no doubt which was the better for promoting green finance. Frankly, I do not know of many financiers who would say that the United States now has more predictable regulation than we have in the United Kingdom. You could say that the regulator is already doing enough. Although I cannot respond to the noble Baroness, Lady Bennett, by having a national conversation, I did organise the FCA to do a drop-in to talk to noble Lords about what it was doing in this area. Every noble Lord I talked to afterwards thought that it would be a mistake to withdraw the “have regard” and that therefore this amendment was the right thing to do. Whether noble Lords believe in the importance of climate and environmental issues or whether they want to be sure that Britain maintains its USP in this critical area of finance, I urge them to vote for these amendments.
Amendments 2 to 9
Moved by
2: Clause 16, page 21, line 21, after “proportionality” insert “and climate and environment” Member’s explanatory statement This amendment is consequential on the amendment in the name of Lord Pitt-Watson to clause 16, page 21, line 23.
3: Clause 16, page 21, line 23, after “principles” insert “and the climate and environment regulatory principle” Member’s explanatory statement This amendment would require the PRA to have regard to the climate and environment regulatory principle (as defined in the amendment in the name of Lord Pitt-Watson to clause 16, page 21, line 39) when discharging its general functions.
4: Clause 16, page 21, line 39, after “subsection (1)(b) and (f)” insert “, and (b) the climate and environment regulatory principle is the regulatory principle in subsection (1)(c).”Member’s explanatory statement This amendment would define the “climate and environment regulatory principle” for the purposes of section 1B(5)(a) and 2H(2) of FSMA 2000.
5: Clause 16, page 22, line 7, after “principles” insert “and the climate and environment regulatory principle” Member’s explanatory statement This amendment would require FCA annual reports to include consideration of the climate and environment regulatory principle (as defined in the amendment in the name of Lord Pitt-Watson to clause 16, page 21, line 39).
6: Clause 16, page 22, line 10, after “principles” insert “and the climate and environment regulatory principle” Member’s explanatory statement This amendment would require notifications by the FCA to chairs of relevant Parliamentary Committees to specify the parts of consultations that address the ways in which the FCA has had regard to the climate and environment regulatory principle (as defined in the amendment in the name of Lord Pitt-Watson to clause 16, page 21, line 39) when preparing proposals.
7: Clause 16, page 22, line 16, after “principles” insert “and the climate and environment regulatory principle” Member’s explanatory statement This amendment would require PRA annual reports to include consideration of the climate and environment regulatory principle (as defined in the amendment in the name of Lord Pitt-Watson to clause 16, page 21, line 39).
8: Clause 16, page 22, line 22, after “principles” insert “and the climate and environment regulatory principle” Member’s explanatory statement This amendment would require notifications by the PRA to chairs of relevant Parliamentary Committees to specify the parts of consultations that address the ways in which the PRA has had regard to the climate and environment regulatory principle (as defined in the amendment in the name of Lord Pitt-Watson to clause 16, page 21, line 39) when preparing proposals.
9: Clause 16, page 22, line 27, after “principles” insert “and the climate and environment regulatory principle” Member’s explanatory statement This amendment is consequential on the amendment in the name of Lord Pitt-Watson to clause 16, page 22, line 22.
Amendments 2 to 9 agreed.
A privilege amendment was made.
Bill read a third time.
Motion
Moved by
Lord Pitt-Watson
That the Bill do now pass.
Lord Pitt-Watson (Lab)
My Lords, this Bill delivers important reforms to ensure that the UK’s financial services sector remains open, innovative and internationally competitive while maintaining high regulatory standards and protecting consumers. It strengthens the legislative framework for financial services, supports growth and investment, and ensures that our regulators have the appropriate powers and responsibilities to respond to a rapidly changing market. The Bill has benefited considerably from noble Lords’ detailed scrutiny and expertise throughout its passage. I hope noble Lords feel that the Government have listened carefully to the arguments advanced in Committee and on Report, and that we have brought forward amendments which were appropriate in response. The Bill, of course, is broad. It touches on lots of areas, but it is united by one common theme, shared by the House: we want to create a clear set of rules which allow the financial industry to serve its customers better and to prosper by doing so. I thank all noble Lords who contributed to our debates, perhaps in particular my noble friend Lord Stockwood, who led the early stages of the Bill. I also thank my officials, who supported the Bill throughout its passage. It was no mean task. I am also particularly grateful to the Opposition and Liberal Democrat Front Benches; to the noble Baroness, Lady Noakes, and other members of the Financial Services Regulation Committee; to members of Peers for the Planet; and to noble Lords across the House, including Cross-Benchers, for their constructive engagement. If I had a special thank you it would be to my Whip, my noble friend Lord Wilson, without whom I would have found this process quite impossible. The Bill leaves this House strengthened by the scrutiny that we have given it. I beg to move.
Baroness Kramer (LD)
My Lords, I will be brief, which has been my practice—as people may have noticed —throughout much of this Bill. I open by saying thank you to the Minister and to the Box. They have been very willing to share their time with us, brief us and listen to issues that we raised. We did not always get the response that we wanted, but it was a positive engagement that gives us some hope for making progress. I think the Minister came to this Bill having been told that it was a minor, technical Bill. That probably could not have been more wrong. I am glad we achieved what we did, working across the Opposition Benches. I give credit to Conservative Peers—the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, and others—as well as, on my side, to my noble friends Lady Bowles and Lord Sharkey in trying to deal with the issues around proportionality. There is a great deal left in accountability that will have to be tackled in future Bills. As we see the speed-up in AI, crypto and the other rapid changes that are coming, we will have to find a new way, as a Parliament, to engage. I also thank the noble Baroness, Lady Neville-Rolfe, for putting in an amendment that began to deal with the digital issue. I really believe that not covering that within this Bill was a miss-out. The Government will have to step up to the plate again very shortly. I am also very grateful for the fact that we got support on the child trust fund issue, again from the Tory Benches. It is something I feel very personally, as people can probably guess. It benefits 80,000 disabled youngsters who have been unable to access money that is theirs that is sitting in trust fund accounts. I thank my noble friend Lord Sharkey in particular for fighting the battle for the FOS—that battle is not over either. I also thank my noble friends Lady Northover and Lady Sheehan; we would have gone farther on the climate change, environment and deforestation issues, but we feel that an important step was taken by the Government in the amendments moved today. This has been a very constructive Bill, but, frankly, it was not the maximum use that could have been made of a financial services Bill and I hope that we will see another one come along shortly. There are problems to be tackled, not least the issues of mortgage prisoners and community development financial institutions, as well as the utterly significant constitutional issue of accountability and how the regulators need to be effectively accountable to Parliament. I thank the whole House for working on a very complex set of issues, particularly as it entered this phase with the understanding that it was only going to be about minor technicalities.
Baroness Neville-Rolfe (Con)
My Lords, I close by acknowledging the considerable degree of cross-party support and engagement that has underpinned most of our discussions on the Bill. I thank the Minister and his officials for their work, as well as the noble Lord, Lord Stockwood, for guiding the Bill through Second Reading and Report. I also thank the noble Lord, Lord Wilson, for his support. I agree with the Minister that the Bill has benefited from its passage through the House in major ways. I am particularly grateful to the noble Baronesses, Lady Kramer and Lady Bowles, and the noble Lords, Lord Sharkey and Lord Vaux, for the constructive way in which they have worked with us on a number of shared priorities. Across the House, we have identified a number of targeted and largely non-partisan areas in which the Bill could be improved. Serious concerns have been raised, and serious, well-intentioned proposals have been brought forward in response; I hope that they will be progressed by the Government. I also thank my noble friends Lady Noakes and Lord Bridges of Headley for the deeply constructive approach they have taken to the important question of accountability and oversight. I strongly urge the Government to continue working with my noble friends on this issue. As I am sure the Minister recognises, they have approached it throughout in the interests of good governance and effective parliamentary scrutiny and with the support of the excellent Financial Services Regulation Committee. My noble friends Lord Ashcombe, Lord Ranger of Northwood, Lord Holmes of Richmond, Lord Massey of Hampstead, Lord Howard of Rising, Lord Mackinlay, Lord Hunt of Wirral and Lady Lawlor have all made important and valuable contributions to our discussions, and I am grateful for their work in raising important matters with the Minister. This is, in many respects, a model of how your Lordships’ House can work at its best: identifying genuine concerns, drawing on expertise from across the House, and working constructively to make legislation more effective, more accountable and better. I hope the Government will take forward the amendments passed and suggestions made as the Bill progresses. Most of all, I thank my noble friends Lord Altrincham and Lord Reay and our team of officials for their support on this complex Bill. Their experience and expertise in this area have been invaluable.
Bill passed and sent to the Commons.
Source: UK Parliament Hansard API. Debate ID: 5408145.