Compensation and Regulatory Failures Bill - Amendment 1

Asked whether the Gloster report, which assesses regulatory failures, sufficiently addresses the issues raised in amendment 1.

Questioned the adequacy of relying solely on the Gloster report for future oversight and suggested the need for an additional body to monitor the quality of financial regulation by the FCA.

Asked whether priority should be given to those who suffered most severely in compensation allocation, acknowledging that all victims are deserving of attention.

Supports the principle of greater scrutiny of the FCA but opposes the specific amendment, citing ineffective measures already addressed by the Gloster report. He argues that investors should be responsible for their own investments due to the high-risk nature and need for caveat emptor.

Asked about the effectiveness of the proposed consumer duty in preventing malpractice and whether an independent committee would be a useful tool to support consumers.

Suggested that the FCA should have direct accountability to elected parliamentarians, rather than being an unaccountable independent body.

Mr McFadden raises concerns about the compensation level being set at 80% of £86,000 and questions why this limit is fixed. He also asks how future regulatory failures will be addressed to prevent similar incidents from happening again.

Mr Chishti intervenes, supporting the need for prioritising compensation for those who have suffered the most and suggesting that data should be used to identify these individuals quickly.

Mr Wilson argues against defining those who have suffered the most due to investment losses, highlighting the complexity in determining whether it should be based on financial loss or overall impact on a person's life.

Mr Grant intervenes and questions whether the outlawing of mini-bonds targeting retail investors by the Financial Conduct Authority (FCA) indicates broader issues with such bond sales, suggesting a need for further protections.

The Minister argues against the amendment by stating that the Government will not stand behind all bad investments in future. He emphasises the uniqueness of LCF's case compared to other failed mini-bond firms and highlights that only three compensation schemes have been established over the past three decades, with this being an exceptional situation.

Intervened to ask about the response of social media companies during discussions on online harms, suggesting that more pressure is needed from MPs for these companies to take responsibility.

Asked the Minister questions about clause 2 and pensions, including the flat-rate levy on pension schemes, the relationship between pension freedoms and financial fraud risks, advice take-up rates for pensioners, and tax charges for those accessing pensions early. He emphasised the need to protect consumers better against scams and advised that these issues will likely be revisited in future debates.

Calls for better regulatory oversight of the Financial Conduct Authority, noting that the FCA failed to act on warnings about London Capital & Finance. Argues that there should be a mechanism within Parliament to hold regulators accountable directly. Suggests creating a Regulatory Accounts Committee modelled after the Public Accounts Committee to scrutinise regulators. Emphasises the need for online platforms like Google to verify bona fide organisations advertising investments.

[INTERVENTION] Agrees with Kevin Hollinrake's point that victims of London Capital & Finance who acted in good faith and followed proper advice should be protected, suggesting a need for stronger safeguards to prevent such situations.

Acknowledges that while his specific amendment may not have received full support, there is significant backing across the House for its intent. Critiques the failures of both the FCA and Companies House in preventing regulatory breaches by scam companies like LC&Finance. Calls for further parliamentary inquiry into these systemic failures.

Supports the Government's compensation scheme but argues that the level of compensation should be increased to 100% capped at £85,000. Emphasises the ordinary nature of those affected and their reliance on regulated and approved companies. Suggests a case for full FSCS-level compensation given the regulatory failure.

Rehman Chishti echoed previous speakers, thanking the Government for offering compensation to individuals affected by fraud. He raised two key points: determining who has suffered the most and addressing delays in compensation payments. Additionally, he suggested that the Digital, Culture, Media and Sport Secretary look into platform verifications to prevent false advertisements and online harms.

Guy Opperman responded to colleagues and wrapped up the Bill, praising the Government's rapid progress in drafting and introducing legislation. He confirmed that payments will be made within six months of Royal Assent for about £120 million compensation to approximately 8,800 bondholders. Clause 2 provides a loan to the Pension Protection Fund for fraud compensation, ensuring ongoing payment to eligible schemes.