Currently the Financial Services and Markets Bill is progressing through Committee Stage in the House of Lords. I am putting forward several amendments to the Bill and this week introduced a proposal that I hope would ensure more is done to improve financial inclusion.
I have long argued that the Government must do more to address financial inclusion and have taken the opportunity of the Financial Services and Markets Bill to suggest that the regulator be given an objective of financial inclusion. Currently the finacial regulator, the Financial Conduct Authority (FCA) has a strategic objective of making sure relevant markets function well.
As they put it,
“Financial markets must be honest, fair and effective so consumers get a fair deal. We work to ensure that these markets work well for individuals, for businesses and for the economy as a whole. Financial markets must be honest, fair and effective so consumers get a fair deal. We work to ensure that these markets work well for individuals, for businesses and for the economy as a whole.”Financial Conduct Authority website
With this piece of legislation the government are planning to add new secondary objectives to the regulators to advance the international competitiveness and medium to long-term growth of the UK economy. I am broadly supportive of this move but feel that unless we directly address the issue of financial inclusion then the pernicious problem of financial exclusion will continue to dog our nation.
Financial inclusion is simply enabling everyone to be able to exercise their full rights as a citizen in this country. This is obviously an economic issue but if every citizen was financially included what would come through that as well is psychological benefits for those individuals – but also, social and economic benefits for the whole of society, for that local community and for the country as a whole. Whichever lens you choose to look through it just makes sense.
The full text of the amendment
Insert the following new Clause—
“Financial inclusion objective for the FCA
(1) The FCA has an additional primary objective to promote, monitor and report on financial inclusion in the United Kingdom.
(2) The promoting, monitoring and reporting must include but not be limited to—
(a) measures the FCA have taken to increase financial inclusion;
(b) levels of digital literacy and connectivity impacting financial inclusion;
(c) levels of financial literacy education in primary and secondary settings;
(d) specific issues facing particularly disabled and older people.
(3) Reports must be published every six months from the passing of this Act.”Amendment 67A, Day 4 of Committee Stage, Financial Services and Markets Bill,
6 February 2023
Back in 2021, when we were working on a different Financial Services Bill (now Act) I tabled a similar amendment – to require the FCA to have an objective to promote financial inclusion in financial services. The full text of the amendment:
Insert the following new Clause—
“FCA objective to promote financial inclusion in financial services
(1) The Financial Services and Markets Act 2000 is amended as follows.
(2) In section 1B (the FCA’s general duties),
after subsection (3)(c) insert—
“(d) the financial inclusion objective (see section 1EA).”
(3) After section 1E insert—
“1EA The financial inclusion objective
(1) The financial inclusion objective is promoting financial inclusion across UK financial services.
(2) In fulfilling this objective, the FCA must place a requirement on all regulated financial services companies to report on their use of financial technology to increase financial inclusion.””Amendment 9, Lord Holmes of Richmond, Committee Stage Day 1, Financial Services Bill, House of Lords, 22 February 2021
When I spoke in the debate last night I considered progress between the last time we debated my proposal for a financial inclusion objective for the FCA and now. I asked the Minister:
“Are there now more or fewer bank branches and ATMs? Is there more or less cash acceptance and financial inclusion? Whatever government agenda we consider—growth, levelling up, or increased connectivity and creativity for our citizens, communities, cities and country—a financial inclusion objective for the FCA makes sense. Will my noble friend agree that it is now time to enable the FCA to play a spearheading role in financial inclusion, and to accept [my amendment] Amendment 67A?”Lord Holmes of Richmond, House of Lords, 6 February 2023
This amendment would assist the FCA in gaining a greater grip on the problem and address the blockers, barriers and bias causing so many to remain so shamefully shut out of mainstream financial services. Such services which would be so enabling, empowering to each and every one of them.
Being financially excluded is devastating and destructive, not just for individuals unable to access mainstream financial services, but for all of us as a society. Ensuring greater financial inclusion makes sense. It makes psychological, it makes social, it makes economic sense. This amendment would add to the collective and widespread work in this area.
Tech UK, Financial Inclusion Blog by Lord Holmes of Richmond