Having lived the Financial Services Bill for the past three months I find myself now reflecting, not just on the clauses, amendments, debates, and discussions, but more on the essence of financial services themselves and the way this impacts the two areas I am most involved with – fintech and financial inclusion.
I have found myself asking what is the purpose of financial services? What, and who, are financial services for and what is our role as legislators in ensuring technology – particularly the emerging technologies of the 4ir – are applied for the greatest benefit of both citizens and state.
In today’s world it is difficult to see how you can function without basic financial services – and these services, whether bank accounts, access to credit, mortgages, insurance, should be enabling, empowering, unleashing potential. Access to financial services – financial inclusion – should be a citizen right.
It is unquestionably positive that we have not one but two Ministers for financial inclusion, in the fine forms of Guy Opperman and John Glenn. This enables horizontal work streams to be led across Whitehall and the launch of the Breathing Space scheme, giving those facing financial difficulties 60 days to receive debt advice and support, is an incredibly welcome and positive initiative. But with millions still finding themselves at the sharp end of exclusion, we must do more. We need a deeper, whole of Government, and beyond, financial inclusion strategy.
I put forward several amendments to the Bill to this end. One amendment was, for the Bank of England’s Financial Policy Committee (FPC), an objective to monitor and act on financial exclusion. The Bank has such a fantastic reputation, respected throughout the UK and revered around the world. It has the potential to play a key leadership role in respect of financial inclusion.
I suggested a similar amendment for the regulator. A financial inclusion objective for the Financial Conduct Authority (FCA) seems sage. The FCA’s consumer protection objective would certainly be strengthened through a greater focus on financial inclusion. Together with the Bank’s FPC this would provide a brace of regulatory activity to the purpose of inclusion. Not, in the end, incorporated into the Bill, but none of this disappears or falls away, it lives on, until the next legislative opportunity to push for change.
I put forward several other amendments related to specific emerging technologies such as a proposal that FS organisations using artificial intelligence (AI) have an AI officer; that the Government commit to pilots of distributed ledger technology for transaction reporting; take action on a distributed digital ID; central bank digital currency (CBDC); open finance and other digital infrastructure. Again, the time or place was not quite right for these proposals, and on some points the Chancellor has acted, announcing a joint CBDC taskforce and a Centre for Finance, Innovation and Technology (CFIT), but the arguments have been made and I will continue to make them.
Happily, one of my amendments was supported by the Government. The ability to get cashback without a purchase is now, following Royal Assent, part of a new Act of Parliament. Whilst I am a passionate advocate of technology in FS, I am aware of the way so often digital exclusion and financial exclusion can go hand in hand.
The pandemic has accelerated a trend towards online banking – in many ways an incredibly positive development – but one that also contributes to the forces weakening our cash infrastructure. For those who need, or want, to use cash it is getting harder and more expensive to get hold of. My change to the law seeks to address that problem.
Small remote retailers and businesses are now enabled to offer cashback without a purchase. I drew the amendment deliberately permissively so as also to allow innovation. For example, in the form of third-party business, now able to offer the service via a group of retailers, a high street, a village, local community and so on. This small change in the law will improve inclusion, be good for individuals, good for communities, good for business and our collective Covid build back. Cashback for a better build back.
What the Financial Services Bill has taught me is how much business, not least the financial services business, is all our business. As it is in the public services, it is us, all of us who put the money in. We have to care how it is directed and deployed, and how inclusion, financial yes, but inclusion in all its bright, brilliant diverse forms runs right through it all.
Inclusion, something well worthy of the title, golden thread. A golden thread capable of delivering on that gold, that cash, those stable coins, crypto assets, CBDCs. Financial instruments in symphony for the benefit of individuals, businesses, communities, cities, and our country.
Lord Holmes of Richmond MBE is Vice Chair of several APPGs. He has co-authored a series of reports for Lords Select Committees as well as a report on ‘Distributed Ledger Technology for public good: leadership, collaboration, innovation.’ Read more about Chris’s amendments to the Financial Services Bill on his blog. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Images: UK Parliament and Colin]
