Peer post – Baroness Kramer on the Financial Services Bill

This week pressure from Lib Dem lords saw the Government make some key concessions to the Financial Services Bill currently going through Parliament. Baroness Kramer explains what was won – and how it showed the virtues of being at the heart of government

Baroness Kramer
Baroness Kramer

NO question – being in government has its benefits!

For 20 years I and my Lib Dem colleagues have battled for legislation that would let community finance revive in this country especially to support deprived communities and small businesses. We got a long way on Monday.

The Government amended the Financial Services Bill to make the regulator have regard to the ability of consumers and small businesses to access financial services, including in areas affected by social or economic deprivation. Then it committed to make the banks publish detailed postcode data, disaggregated by bank, to let us see where the gaps in credit and other financial services exist.

The two steps provide the basis for new services and new organisations to fill those vacuums. It won’t happen overnight but community development finance institutions, social enterprises, charities, local authorities and others can begin to build finance capacity, perhaps in partnership with the major banks.

As the sector develops communities will be able to get out of the grip of the pay-day lenders and small businesses with sound business plans will have a way to raise the funds they need. In that same Bill we removed some of the key obstacles to Social Impact financing. Projects such as a local scheme to reduce prisoner reoffending or to build social housing or a community hall cannot rely just on donations to raise the money they need.

New amendments in the Bill will make it easier for them to borrow money from people who are interested in supporting the project because of the social good it offers but who would like the chance, though not the certainty, that they might get their money back and even earn a small return. There are still some obstacles left before everyone can participate in lending like this but the hurdles are much reduced.

Problem solving of this kind is a strength of the Lords. By Monday (and after months of slog) we had good cross-party support. The commitment of the new Archbishop-designate to community finance was brilliant. Government resistance melted with rather good grace by the end. But without our role in Coalition John Sharkey and I (as co-conspirators) would still be battling the windmill instead of planning steps towards implementation.


Published and promoted by Tim Gordon on behalf of the Liberal Democrats, both at LDHQ, 8-10 Great George Street, London, SW1P 3AE.


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