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Lord Phillips to table social investment amendment to Financial Services Bill

Finance | Vibeka Mair | 11 Jun 2012

Liberal Democrat peer Lord Phillips of Sudbury is to table an amendment to the Financial Services Bill in support of social investment today.

Lord Phillips will propose an amendment that will require the two new financial regulators created by the Bill to remove barriers to social investment. 

The current Bill has no explicit mention of social investment. Lord Phillips' planned amendment around social investment will be the second attempt in Parliament to include it the Bill.

During its passage through the House of Commons, Chris Leslie MP, shadow financial secretary to the Treasury, proposed a social investment amendment which would require the Financial Conduct Authority, one of the coming regulators, to actively promote social investment.

However, the proposals were narrowly defeated in the Financial Services Bill Committee by 10 Tory and Liberal Democrat MPs, while eight Labour MPs voted in support of the amendments.

Lord Phillips has worked with Baroness Kramer, who is leading for the Liberal Democrats on the Bill in the House of Lords, to build support for his amendment.

Lord Phillips said: “Social investment needs explicit reference and support in the Bill.  It is a fast-growing and hydra-headed sector populated by charities, mutuals and social enterprises. It is vital that encouragement should be given to this new ethical force in finance – this is why I am putting forward this amendment.”

The amendment is supported by Social Enterprise UK. “The Financial Services Bill presents a vital opportunity to put social investment on the wider financial map and have it recognised by regulators,” said chief executive Peter Holbrook.

“The social investment market has taken great strides in recent years, but to ensure its continued acceleration and growth, acknowledgement in this legislation is urgently needed.  The amendment is a small ask, but critical and we won’t get this opportunity again anytime soon.”

The Financial Services Bill is a response to the financial crisis of 2007/8 and the perceived breakdown of the tri-partite regulatory system which currently exists between the Bank of England, HM Treasury and the Financial Services Authority.

As well as creating a new overarching Financial Policy Comittee in the Bank of England, the Bill will create two new regulators, the Prudential Regulation Authority, which will be responsible for systemically important institutions, and the Financial Conduct Authority (FCA), which will be responsible for protecting consumers.