Natalie Bennett: Post-Brexit finance proposals are not getting the scrutiny they deserve

We need a body that can make sense of finance and stick up for the public.

City of London

Natalie Bennet is former leader of the Green Party of England and Wales and now a member of the House of Lords

Gerry Rafferty might never have exactly sung “Finance to the left of me, Finance to the right of me, stuck in the middle with you”, but that’s how it feels right now in the House of Lords as the government rewrites the post Brexit rulebook on finance with minimal scrutiny. 

Yesterday was the National Investment and Security Bill. Today it’s the Financial Services Bill. With the disappearance of acres of European Union oversight, and years of stasis in parliaments obsessed with Brexit, predictions are of another dozen financial bills coming down the track towards us.

Yet what is striking is how sparse the list of names down as speakers for these Bills is. Over in the – also terribly important – Domestic Abuse Bill debates, which run in parallel, the lists are packed. The total numbers of peers participating is four times as high. Almost every issue has its own champion proposing it and maximum number of extra supporters. The debate there is passionate and varied, the briefings flow in from non-governmental organisations and campaign groups.

In each group of amendments in the Finance bills, by contrast, you get a proposer, maybe one other signer, a couple of speakers, usually the same people again and again (mostly peers who are champions of the financial sector), then the Lib Dem and Labour reps, then the minister.

I’m in there as much as I can, presenting a different perspective (although I’ve also got a large investment in the Domestic Abuse Bill, a natural feminist home), and there’s fellow Left Foot Forward contributor Prem Sikka, and some useful contributions from new peer Lord Davies of Brixton. Credit due too to Baroness Bowles of Berkhamsted, often a critical voice.

If this can be called scrutiny – which is supposed to be the Lords’ role – then it is a sparse and scant examination of what is often complex, technical, but highly important details.  There’s an occasional briefing from law groups. There may be some briefings from the financial industry, although they don’t make their way to me. On an occasional issue – as with that of debt relief for a very specific group of desperate, poor individuals, after I reached out to campaigners, there is some level of NGO campaigners. I also pay credit to Andrew Baker at SPERI Sheffield and Nicholas Shaxson of the Tax Justice Network for preparing briefings that I’ve circulated to other peers for the two amendments that I’m presenting today.

But it’s hard to think of a more appropriate adjective than “thin” for the level of debate and examination. And several peers were lamenting yesterday in the the National Security and Investment Bill that even practitioners in the mergers and acquisitions business were unaware of its progress, or impacts on their work. Maybe “under the radar” is a better description.

That’s a cause for great concern. The financial sector is a threat to the security of all of us. In 2007-08, it very nearly caused the cash machines to stop working, and the Greensill crash is a reminder of the growing risks of a swelling mound of money swilling around the world in search of returns. Its over-large size costs us dear.

Yet often there’s an impression, helped by a swell of government amendments to bills already passed through the Commons, that the civil service itself has very little idea of what this all means, or the impact of technical decisions whose costs could run to billions.

Previously, the same rules were subject to scrutiny in the European Parliament, with MEPs from 27 other European countries as well as the UK. And crucially, there was an organisation called Finance Watch, overseeing it all, with a mandate of “making finance serve society”.

It was established in 2010 by a group of 22 MEPs, including Greens, with a €1m grant, tasked with providing advice and counter submissions to parliamentarians on pieces of financial regulatory legislation. In particular, they were given the job of identifying, amending and removing clauses that could be shown to place excessive costs and risks on the wider public.

Among its success (and I promise for your reading pleasure I’ve taken lots of the detail out of here): comprehensive details for consumers in Packaged Retail Insurance-based Investment Products, position limits restricting speculation on food commodity markets in a revision of the Markets in Financial Instruments Directive, and a 24% reduction in the risk weighting to loans to SMEs, to stimulate real economy lending, affecting the implementation of Basel III.

Can our modest cohort of peers in Westminster do anything like this? I very, very much doubt it. 

Which is why today I’m introducing amendment 124 to the Financial Services Bill, proposing to introduce a UK Financial Scrutiny and Oversight Network (FSON). (Okay, maybe we can find a snappier acronym, but things being called the same as their European equivalents seems unlikely to encourage government acceptance right now).

It is a network because the idea is to create something modest to bring together expertise from academia, from trade unions and consumer organisations, from campaigning NGOs, and provide the modest resources needed to at least start to match the lobbying power of the financial sector – in expertise if not pay. 

The risk of what’s known as regulatory and policy capture – the government doing what industry wants at great cost to the rest of us, and even to the longterm sustainability of the industry itself, given the short-term pressure for shareholder dividends and management bonuses  – is well documented as being extraordinarily high in the financial sector.

FSON wouldn’t be a magic wand. But it would be a start. And if the government wants to be world-leading in the financial sector, then it needs world-leading regulation. With Finance Watch, the EU is ahead. FSON would just be the UK catching up.

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