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Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 3) Regulations 2019 - Motion to Approve

Part of the debate – in the House of Lords at 6:00 pm on 1st October 2019.

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Photo of Lord Bethell Lord Bethell Lord in Waiting (HM Household) (Whip) 6:00 pm, 1st October 2019

My Lords, I would like to thank everyone for participating in a really meaty discussion about an SI that is incredibly detailed in nature. The discussion got under the skin of some very serious issues.

I shall start by tackling head-on the comments made by the noble Baroness, Lady Bowles, about the late notice or delivery. I completely sympathise and understand her point. With a mopping-up SI such as this, one wants to capture the latest changes that have been processed, and therefore there is a pressure to have the SI as up-to-date as possible and that mitigates against early delivery. However, I agree with her sentiment that it is preferable for these things to be delivered early, and I will try to ensure that the department achieves that.

I do not want to raise the curiosity of the noble Baroness, Lady Bowles, too much about the CJA—that could be dangerous for the department—but I reassure her that the concerns she had were just about an omission. We need to reflect that Gibraltar and the EEA will be separate jurisdictions but that market abuses will still be caught in the same way as now. The changes that refer to the CJA simply capture that.

I will try to provide some reassurance on systematic internalisers. As the House knows, this instrument amends MiFID legislation so that the ability to meet the shared trading obligation using a systematic internaliser requires such trades to be made through a UK systematic internaliser after exit. This change in scope is consistent with the overall onshoring approach; it does not try to create something different. Once we are outside of the EU single market and joint supervisory framework, UK regulation will need to reflect that.

The noble Baroness, Lady Bowles, also asked about Solvency II and the risk-free rate. I reassure her that the risk-free rate will be calculated on the same basis as now. The change is that it will be published by the PRA instead of the EIOPA. That will be the principal change from this SI.

The noble Baroness, Lady Kramer, asked about equivalence with Singapore. We will carry over all the EU’s existing equivalence decisions, including that for Singapore. I can explain that we are speaking to Singapore about that jurisdiction recognising the UK in the same way. I understand that talks are progressing well, and I hope to be able to provide good news to the House at a future date.

The noble Lord, Lord Davies, asked about a plain English explanation. I reassure him that we provided an overview to noble Lords earlier this year, but I am happy to provide any further information that he may require and to chat about that at a later date.

The noble Lord, Lord Davies, also asked whether adjusting to all these changes is a substantial challenge for industry. That is linked to the heartfelt and moving appeal about this entire process from my noble friend Lord Deben. I take my noble friend’s comments on board, but I have a different perspective. In life, you often have to spend a significant amount of your time providing for and protecting yourself against things that you hope will not happen. That is a basic fundamental in life. That view is shared by not just me but the financial services industry, which urges this House, Parliament and the Government to pursue these measures with great energy and in great detail, to ensure that there is full protection against a possible no-deal Brexit.

At times, it feels like a waste of energy and a distraction, but that does not detract from the value of the work that has been put in. I have not been sitting here for the 50 SIs and I do not have the scars on my back like many in this room, but I still value enormously the expertise, time and passion that have gone into making such a good job of this whole exercise. I endorse the work of Parliament, industry and the officials working on all of this and reassure the House that it is taken extremely seriously by the Government. In that vein, I commend these regulations to the House.

Motion agreed.

House adjourned at 6.14 pm.