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Financial Services Sector: Regulatory Framework

Volume 732: debated on Tuesday 9 May 2023

3. What steps his Department is taking to improve the regulatory framework of the financial services sector. (904816)

The Edinburgh reforms take forward the Government’s ambition to maintain the UK’s position as a world-leading global financial centre, while ensuring that our financial sector remains robust in the face of market shocks. In particular, they introduce a new secondary duty of facilitating growth and international competitiveness, which is a first for UK regulators.

I thank my hon. Friend for that answer. Clearly, the culture and performance of regulators is one key consideration for firms when they choose to invest in the UK. What steps is he going to take to introduce key performance indicators for financial regulators to report on their delivery against the new growth and competitiveness objective in the Financial Services and Markets Bill? Is he considering adding any measures to the Bill that would strengthen the independent scrutiny of regulators?

My hon. Friend does great service as chair of the all-party group on personal banking and fairer financial services, so he knows of what he speaks. Today, the Government published a call for proposals on the metrics that regulators should publish to support scrutiny of their work; as every business leader knows, what gets measured gets managed. That responds to the significant interest shown by industry and Parliament in ensuring that appropriate and transparent public measures are in place to support scrutiny of the regulators’ performance. The Government are clear that with great power must come greater accountability.

One measure that would improve the regulatory framework for mutuals in the financial services sector, such as Royal London or Liverpool Victoria, would be the introduction of permanent mutual shares. Given that such a reform would allow a new safe route to access the capital that such financial mutuals need to expand—and without having to demutualise—will the Minister explain why the Treasury is still dragging its feet on the introduction of such a significant reform?

The hon. Gentleman and I have talked a number of times about this. I do not think it is fair to say that the Treasury is dragging its feet. We have supported reform of the mutuals sector. We welcome a diversity of provision, which involves a greater expansion of and more commercial freedom for the mutuals sector. With the Law Commission, we are looking to take its work forward to see whether we can help, and I am always happy to sit down with him, or with any representatives from the sector, as part of my widespread programme of engagement.