Lord Phillips of Sudbury says the successors to the Financial Services Authority should support 'new ethical force in finance'
An amendment to the Financial Services Bill requiring the two successors to the Financial Services Authority to support social investment will be put forward by the Liberal Democrat peer Lord Phillips of Sudbury.
The bill will create two new regulators to replace the FSA: the Prudential Regulation Authority, which will be responsible for major financial institutions, and the Financial Conduct Authority, which will be responsible for protecting consumers.
It is due to come before the House of Lords today for its second reading. The amendment will be proposed at some point in the next two weeks, according to a statement released on behalf of Phillips by Bates Wells & Braithwaite, the law firm he founded.
The text to the amendment has not been finalised, but the statement said it will recognise the "desirability" of social investment generally and require the two new regulators to support the development of social investment where this is compatible with their other objectives.
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."
A similar amendment to Phillips’ has already been proposed by Chris Leslie MP, shadow financial secretary to the Treasury, in the Commons bill committee. The amendment was defeated by 10 votes to eight on party lines at a vote by the committee.
In the Commons, Mark Hoban MP, financial secretary to the Treasury and the minister in charge of the bill, said he rejected any suggestion that the Financial Conduct Authority should "promote" social investment.
The Commons amendment was backed by 20 sector infrastructure and social investment bodies, including Acevo, Big Society Capital, the Community Development Finance Association, the National Council for Voluntary Organisations and Social Enterprise UK.