Financial Services and Markets Bill – in a Public Bill Committee at 2:15 pm on 3rd November 2022.
“(1) No payment service provider providing a relevant service (the ‘provider’) may refuse to supply that service to any other person (the ‘customer’) in the United Kingdom if the reason for the refusal is significantly related to the customer exercising his or her right to freedom of expression.
(2) Where a customer has prominently and publicly exercised his or her right to freedom of expression, it is to be presumed that any refusal by a provider to supply a relevant service was significantly related to the customer exercising his or her right to freedom of expression unless the provider can provide a substantial basis for believing there was an alternative good and proper reason for the refusal.
(3) Where a customer has prominently and publicly exercised his or her right to freedom of expression and has been refused a relevant service by a provider on application by the customer, the FCA must within 5 working days issue an order to the provider immediately to recommence supply unless the FCA considers it clearly inappropriate to do so.
(4) An order issued pursuant to subsection (3) must last until the FCA is satisfied that there was or there has subsequently arisen an alternative good and proper reason for the refusal.
(5) Upon considering an application by the customer under subsection (3), where the FCA decides not to issue an order to the supplier, the FCA must give reasons in writing to the customer explaining its decision not to issue an order.
(6) Where the FCA is satisfied that there has been a breach by a provider of the obligation in subsection (1) or the failure to comply with an order issued pursuant to subsection (3), the FCA may impose a penalty on the provider of such an amount as it considers appropriate. The FCA may, instead of imposing a penalty on a provider, publish a statement censuring the provider.
(7) The FCA must within three months of the coming into force of this section prepare and arrange for publication of a statement of its policy with respect to—
(a) the circumstances the FCA will consider under subsection (3) in deciding whether it is clearly inappropriate to issue an order; and
(b) the imposition of penalties and statements of censure under subsection (6).
(8) A breach by a provider of the obligation in subsection (1) and the failure to comply with an order issued pursuant to subsection (3) are actionable at the suit of the customer, subject to the defences and other incidents applying to actions for breach of statutory duty.
(9) In this section—
(a) a ‘relevant service’ means a service which is (in whole or in part) directed at users in the United Kingdom and constitutes—
(i) any service provided pursuant to any regulated activity; or
(ii) any service in relation to a payment system for the purposes of enabling the transfer of funds using the payment system as referred to in section 42(5) of the 2013 Act;
save for any service expressly excluded by regulations;
(b) a ‘payment service provider’ has the same meaning as under section 42(5) of the 2013 Act;
(c) the right to freedom of expression has the same meaning as under Article 10 of the European Convention on Human Rights—
(i) save that it includes the right to campaign for or seek to protect the right to freedom of expression of others; and
(ii) save as excluded by regulations;
(d) ‘the 2013 Act’ means the Financial Services (Banking Reform) Act 2013.
(10) Regulations under this section may be made pursuant to the provisions of section 428 of FSMA 2000 save that—
(a) before preparing regulations under this section, the Secretary of State must consult the FCA and such other persons as the Secretary of State considers appropriate; and
(b) they must be adopted using the affirmative procedure before Parliament.”—
I beg to move, That the clause be read a Second time.
It is a pleasure to serve under your chairmanship, Mr Sharma. New clause 15 would protect freedom of expression by giving the Financial Conduct Authority the necessary regulatory powers and ability to impose disciplinary measures on a payment service provider for a breach of the rules. We need legislation to prevent payment service providers such as PayPal from demonetising individuals or organisations for political reasons.
Members might remember in early September a bit of media agitation surrounding PayPal’s decision to cancel the online payment accounts of the Daily Sceptic and the Free Speech Union, and the personal account of an individual called Toby Young. Some present might not agree with the politics of those organisations and that individual, but it is fundamentally wrong that online payment accounts can be exited because the payment service provider or its staff do not agree with the opinions of the service user—the customer.
We are not talking about hostile states or terrorist activity, for which there is legislation progressing through Parliament—the Online Safety Bill and the National Security Bill. We must protect our right to free speech, expression and opinion. Freedom of speech or expression is the right to seek, receive and impart information and ideas of all kinds by any means and is an internationally recognised human right. It should be illegal for financial services to engage in political censorship, and customers need to be sure that online services cannot, on a whim, demonetise customers without proper justification.
The relatively recent digitalisation of financial transactions has placed an unprecedented amount of power in the hands of online payment service providers such as PayPal, as well as banks, credit companies and online platforms. Our legislation must keep pace with rapid technological changes.
We have seen different organisations demonetised—for example, the UK Medical Freedom Alliance, for raising questions on covid vaccines. I might not agree with it, but it is still entitled to air its views or raise its concerns. UsforThem, a parents’ group that fought to keep schools open during the pandemic, was also demonetised. Looking back, many, including Ministers, have admitted that closing schools was the wrong thing to do and they should not have been shut down.
Financial censorship must be prevented. As we switch to a more cashless society, we must put legislation in place to protect people from being punished by payment processes for expressing different views, no matter their politics or the party they support. My new clause is designed to ensure that the regulator has the ability to ensure that financial service providers cannot withdraw or withhold service from a customer on political grounds. I hope that the Minister and the Committee will support the clause.
I welcome and recognise my hon. Friend’s interest in the topic. Free speech and freedom of expression more broadly are vital to all Members. Financial censorship is wrong. I am grateful for my hon. Friend’s contribution; the specific case of the Free Speech Union raises a wider and more complex set of questions about whether it is ever appropriate for a business to withhold a service based simply on divergent views.
Committee members will recognise that there is a legitimate question of how to raise this matter—whether it is best to do so in this piece of legislation or others. The wider issue is generally addressed in the Equality Act 2010, which specifically prohibits service providers in the UK from denying services to people on the basis of their beliefs. That is defined widely to include philosophical as well as religious beliefs.
The Government do not deny the important role that financial services—particularly payment providers, in respect of which there is a concentrated market—play in providing services that facilitate integral activities such as making and receiving payments. There is already legislation in this policy area: under the Payment Services Regulations 2017, a service could be terminated but that must be covered in the provider’s terms and conditions, and the denial of service must be communicated to an affected person in advance, with notice. My hon. Friend said that did not happen in the case she mentioned, which is a concern. We ought to understand whether that is a legislative or a compliance issue. I hope the FCA, which is responsible for the payment service regulator, will look into that.
Under the 2017 regulations, the immediate denial of a payment service can be made only when there is suspicion that a payment instrument has been used in an unauthorised or fraudulent way. We understand that that would be clearly distinguished from merely a freedom of expression concern, as in the case my hon. Friend talked about. Individuals who have a service withdrawn also have the ability to appeal to the Financial Ombudsman Service. I note that in that case, we are talking about a business or an organisation rather than an individual. It would be worth giving further consideration to how the proposed new clause interacts with the existing regulatory regime and whether the current regime is insufficient.
I commend my hon. Friend for bringing forward such a well-developed clause, but it is right that the Government look in detail at how it would operate in practice and whether it would achieve the aims that she intends. The Government are due to review the 2017 regulations in January 2023. If we reflect on the concerns over the issue, a sensible course of action would be to include in the review’s call for evidence questions about the adequacy of the existing protections in respect of payment services. I am happy to confirm that it is therefore my intention to explore this issue as part of that statutory review in January 2023.
I note that the new clause raises questions about the role and powers that the FCA should be given in adjudicating over any such regime. On that particular point, I am not sure how the FCA has the expertise, as a financial regulator, to adjudicate over matters of freedom of expression, which the new clause in its current form would require. They seem to be quite different matters, and they are not simple.
Beyond that particular case, we do not have a wide body of evidence about the adequacy of the existing regulatory regime that governs payment services. That is not to take away anything from that case, which in itself provokes deep concern, but it is not clear how prevalent or widespread the issue is. It may be that Opposition Members have examples as well—one can easily imagine a group of activists or a trade union being affected by a similar measure. I can see that there may be other instances and other areas of concern.
My hon. Friend has raised an important issue, which the Government will take very seriously. I hope I have been able to reassure her of how significant the Government think this matter is, and I am thankful to her for her continued dialogue. Given that I have committed to meet her and to continue to explore whether the new clause has the right form of words and is in the right place, I ask her to withdraw it for now and not put it to a vote. We will continue the dialogue and potentially revisit the issue at a later stage.
I thank the Minister for his response. I am quite keen for us to meet up, possibly with the organisations that have suffered because of PayPal’s action. It is really important that we hear from those organisations and the individual who suffered, and that we find out how widespread the issue is. If even one organisation gets demonetised, that is enough for something to be done about it. Based on the fact that there is clearly some support and that the Minister has promised to meet, I beg to ask leave to withdraw the motion.