Financial Services Bill Amendment: Financial Policy Committee & Financial Exclusion

Today (8 March 2021), in committee stage of the Financial Services Bill I will be putting forward an amendment suggesting an objective on the Financial Policy Committee (FPC) of the Bank of England to monitor financial exclusion in the UK and report to Parliament on their findings.

The full wording of the amendment:

Insert the following new Clause—
“Financial Policy Committee: financial exclusion
(1) The Bank of England Act 1998 is amended as follows.
(2) In section 9C (objectives of the Financial Policy Committee)—
(a) after paragraph (1)(b) insert—“
(c) monitoring exclusion from financial services in the United Kingdom.”
(b) after subsection (6) insert—“(6A) The Committee must lay a report before both Houses ofParliament every quarter on its findings under subsection (1)(c).
(6B) The report under subsection (6A) must include—
(a) the number of individuals in the United Kingdom without a current account,
(b) the number of small and medium-sized enterprises who rely on cash, rather than financial products, and
(c) how financial technology solutions are improving financial inclusion.””
Amendment 131, Committee Stage Day 5, Financial Services Bill, House of Lords, 8 March 2021

The FPC was established in 2013 as part of the new system of regulation brought in to improve financial stability after the financial crisis. This central principle is described as a system that:

“… can provide crucial services to households and businesses in good times and bad.”

“Financial stability might sound confusing but it’s just a way of describing the financial system when it’s fulfilling its basic roles. With a stable financial system, the wheels of the economy keep turning, even when the conditions get difficult.”

It seems self evident that with:

1.7 million individuals without a bank account,
thousands of SMEs without the lines of credit they require and
thousands of individuals chained up as mortgage prisoners,

to name just three examples, currently, we neither have financial inclusion, nor financial stability.

The Bank of England further describe the Financial Policy Committee as:

“the mechanics of the financial system, working to keep everything moving smoothly. They identify risks and flaws in the financial system”

Financial exclusion is clearly one such serious flaw. Dogging our nation for decades, putting out potential, blighting lives, bridling business growth, not least SMEs. We have the opportunity in the Financial Services Bill to make a material difference; to include, to enable, to unleash all of that individual, business, community, city, all that UK resource and resourcefulness.

Without meaningful financial inclusion, it’s difficult to justify any claims on financial stability and I hope the government will seriously consider this amendment along with their colleagues at the Bank of England.

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