Civil society leaders have backed a letter to the Treasury which requests support for amendments to the Financial Services Bill to stimulate the growth of the country’s social investment market.
Peter Holbrook, chief executive of Social Enterprise UK, has collected 16 signatures and written to the minister in charge of the Bill, Commercial Secretary to the Treasury Lord Sassoon, asking for his support for amendments proposed by Lord Phillips.
Social Enterprise UK is supporting two of Lord Phillips' changes, both of which relate to regulatory principles to be applied by the two new regulators that will be created by the Bill.
The group firstly wishes an extra regulatory principle added to the existing six, to read: "The desirability generally of having due regard to the particular requirements of social investment so far as is compatible with the advancement by each regulator of its objectives.”
It also wants the definition of 'social investment' to be clarified as "investment into or by organisations which exist wholly or mainly to provide benefits for society or the environment".
Reasoning for the amendments
Celia Richardson, director of external affairs at Social Enterprise UK, explained to civilsociety.co.uk the reasons behind the proposed changes.
“One of the things the Financial Services Bill is designed to do is create the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to replace the current Financial Services Authority,” she said. “The first of the amendments were are supporting is designed to assure that the new bodies recognise social investment, as it is a relatively new term.
"The second amendment is to make sure that definition of social investment used by the Bill is consistent with the one used by Big Society Capital.
“Overall, we want to get social investment into the DNA of financial services regulation. Social investment has distinctive features – mixed motivation etc. It’s a valid and increasingly mainstream form of investment.”
The full list of amendments to the Financial Services Bill to be moved in the committee today can be found on Parliament's website here.
Peter Holbrook states in his letter to Lord Sassoon that the amendments, which are being tabled at the committee stage of the Financial Services Bill today, are consistent with government policy on social investment, as it stated in its paper Growing the Social Investment: A Vision and Strategy.
“This strategy recognises that the UK is leading the world when it comes to social investment,” Holbrook writes. “The volume and intensity of activity in the social investment market is set to grow rapidly, with the arrival of Big Society Capital.
“We therefore call upon the government to accept the amendments, which have support in the House of Lords across all parties and near universal support amongst civil society.”
Support for the amendments
Supporting signatories in Holbrook’s letter include notable sector figures such as Caron Bradshaw, Sir Stephen Bubb and David Hutchison, the CEOs of CFG, Acevo and Social Finance respectively. Prime Minister David Cameron and minister for civil society Nick Hurd were copied in to the letter.
Last week, the Labour party used a Lords debate to pledge its support to Lord Phillips’ proposed amendment, following the party’s previous unsuccessful attempt to get social investment mentioned in the Financial Services Bill.
Lord Phillips, founder of law firm Bates Wells & Braithwaite and Baron of Sudbury, has been working with his fellow Liberal Democrat Baroness Kramer, who is leading for the party on the Bill in the House of Lords, to gather support for his amendment.
