I was incredibly concerned to learn of PayPal’s decision to shut down certain accounts citing its “Acceptable Use Policy”. It is deeply worrying that a company can so quickly, and without warning, withdraw financial services from users likely reliant on continued funding.
I understand that the Economic Secretary to the Treasury has met with both PayPal and the Financial Conduct Authority (FCA) on this issue. I welcome that PayPal have stated that they are dedicated to providing safe and affordable financial services to people of all backgrounds with a diversity of views, and are a strong supporter of freedom of expression and open dialogue and, as such, do not seek to be an arbiter of free speech.
The Government has confirmed that the legislative framework in this area remains effective. One such area of regulation is the Payment Services Regulations (2017), which sets out the rules for online payments. There are further protections in the Consumer Rights Act (2015) and Equality Act (2010).
I welcome that the Government has pledged that the issue of free speech and freedom of expression will be included as part of a review of the regulations in January 2023.
Furthermore, I have received assurances from the Government that further legislative protections can be brought about swiftly due to changes which the Financial Services and Markets Bill is bringing in by repealing retained EU law.
I will be sure to continue engaging with ministerial colleagues and others on this important issue.
Energy and food speculation risks
This Bill makes important updates to the UK’s financial services regulations.
The Government believes effective commodities markets regulation is a key part of ensuring economic stability. This is a lesson reinforced by both the food and financial crises in the 2000s. In response to G20 commitments, the EU put in place a regime that sets limits on the amounts of commodity derivatives that market participants can hold, to ensure speculation does not lead to economic harm.
This specific issue concerns what are known as the ‘MiFID II’ reforms. The UK played a significant role in designing the MiFID II framework, and the Government believes that the resilience and effectiveness of the UK’s capital markets has been significantly strengthened by the post-crisis reforms that it implemented. The Government supports the application of position limits to the most volatile commodities (including key energy and agricultural products).
While the UK was in the EU, a large portion of the UK’s financial services regulations were made by the EU, and were not tailored to the UK’s needs. Now that the UK has left the EU, we can design our own regulations to fit our needs, which is what this Bill aims to do.
Inherited EU regulation unnecessarily captured all exchange traded and economically equivalent over-the-counter commodity derivative contracts including those that have low levels of volatility and risk. This undermines efficient pricing in many such contracts and creates burdens for firms.
To address this, the Financial Services and Markets Bill will ensure exchanges can once again set position limits, within a Financial Conduct Authority (FCA) framework. Exchanges are well placed to ensure that such position limits only apply to contracts that are subject to high volatility.
However, Ministers are clear that agricultural products and other key physically settled contracts such as oil and gas will remain subject to position limits. The FCA will also have powers to intervene to set position limits if need be.
I know that the regulators are aware of concerns in this area and the regulations will remain under constant review. I will be sure to continue engaging with colleagues on this important issue.