Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): I welcome to the meeting Emad Aladhal, director of retail banking at the Financial Conduct Authority (FCA), which is a UK-wide regulator. Financial services and banking are a reserved matter, but it is a really important, locally focused inquiry, so we are very pleased to have Emad from the FCA with us. I invite you to make some opening remarks. Members, please indicate if you wish to ask a question.

Mr Emad Aladhal (Financial Conduct Authority): Thank you very much, Chair. I will keep my opening remarks relatively short to allow for questions and discussion. I will start by saying how delighted I am to join you today. Thank you for the invitation to allow us to engage with you directly in this way. You have our submission. I will do my best to answer questions today, but if there is anything else of particular interest, we can follow up subsequently to provide the detail.

In our submission, we set out, as you have just articulated, Chair, that the FCA is the regulator for the whole of the UK. We supervise and regulate some 42,000 firms, of which 1,500 are based in Northern Ireland. Our perimeter, which is set by the UK Government and Parliament, determines what we can do. We are a body that is funded by the firms that we regulate, but it is incredibly important that we represent the whole of the UK, as, hopefully, shown by my representation and the representation of colleagues that are based here and elsewhere. That is why we are so focused on the context in which the communities in Northern Ireland operate.

We have set out our strategy for the next five years. It was published recently. We will be coming back to Northern Ireland in June to launch it here. Our strategy sets out how we continue to build from the strong base that we have to be a smarter regulator, to support growth, to help our consumers and to fight financial crime. The work programme, which was published in April, sets out how we are going to take the first year of that strategy — our work priorities for the forthcoming year.

In our submission, we set out our access-to-cash rules. I know that that is of particular interest to communities in Northern Ireland, as it is to communities in the rest of the UK, and that it has been a matter of discussion here. [Interruption.]

The Chairperson (Mr O'Toole): I will interrupt you, Emad. Apologies for the noise outside. Someone in the Assembly authorities must have thought that it would be a smashing idea to schedule whatever is happening to the outside the Building to happen while Committees are taking evidence. Please bear with us. I will let you continue with your opening statement.

Mr Aladhal: Thank you very much. I thought that it was a protest against what I was saying.

The Chairperson (Mr O'Toole): We are not at that stage yet. [Laughter.]

Mr Aladhal: Excellent. Our regime of access-to-cash rules came in in September 2024 following changes in legislation that allowed us to set out standards in that space. In the time that we have today, we can talk further about how that applies to and factors into Northern Ireland. An area of particular importance is financial inclusion for our communities generally, including those in Northern Ireland, and, again, I can go into some of our work in that space.

I will stop there to allow us to devote time to the discussion.

The Chairperson (Mr O'Toole): Thank you very much. Members, please indicate if you want to ask a question. We have members who are joining us remotely, and one or two other members may enter the room while we proceed.

Our inquiry is about establishing information and potentially making recommendations — or, at least, making observations where we cannot agree on recommendations. Some of those may be made to devolved Ministers, and some of them may be made to UK Ministers or, perhaps, even regulators and the financial services industry writ large.

My first question is a broad one. In retail banking terms, from the FCA's perspective, what strike you as being the key differences between the Northern Ireland market and that of other parts of the UK?

Mr Aladhal: There is no single, uniform pattern in the UK. There is no single, homogenous characteristic in the UK; each community has different characteristics. It is important that, when we come to regulate, supervise and provide our role here, we recognise those differences and apply them accordingly. Northern Ireland has a large credit union presence: there are some 138 credit unions here. You have largely rural communities. You have a large number of microbusinesses, which account for almost 90% of businesses here. To put that in context, as I said, 42,000 regulated firms are subject to our regime. Of those 42,000, about 1,500 are based here. As director of retail banking here, I am very familiar with the fact that you have the presence of some large, key players, three of which are largely based only in Northern Ireland, and one that is part of a wider group but has a large presence in Northern Ireland. You also have other banks and building societies based here. All those factors inform how we supervise and regulate.

In retail banking, the teams report to me as part of the strategy that I noted in my introduction. We restructured retail banking slightly to cater for some of those priorities. One of the changes that we implemented was to have a dedicated team that is focused on Northern Ireland and the large banks that are based here. That allows us to make sure that we are able to recognise the particular contexts in which Northern Ireland banks operate.

The Chairperson (Mr O'Toole): Just one quick thing, Emad: could you please speak a bit louder, not just because of the external noise but so that the microphones can pick you up and the members who are joining us remotely can hear you?

You mentioned our greater rurality, which is true and comes back to us, as representatives, time and again in the context of the inquiry. One of the things that we deal with most often in representations from our constituents is their greater reliance on cash and, frankly, greater financial insecurity. What work is the FCA doing to address those issues? Do you have any particular observations to make about the Northern Ireland context: the greater rurality, the greater reliance on cash and the slightly higher levels of financial insecurity and precarity, which came out in your survey data as well?

Mr Aladhal: Am I loud enough?

The Chairperson (Mr O'Toole): Yes, absolutely.

Mr Aladhal: On cash, as I said in the intro, the regime was introduced last September, following changes in legislation to allow it. That regime recognises that it is not a one-size-fits-all situation. It is carefully drafted to say that, when a bank is considering closing a cash provision service — a branch or an ATM — or when a community makes a request, there must be an undertaking to look at the particular community needs in that area and to make sure that the bank is responsive to them. That may mean introducing a cash service provider, such as an ATM or a hub, or working with the Post Office. Here, they are looking at parameters concerning distance and the costs of travelling to a bank. That is a particular factor when we look at rural areas, where it is not just about "as the crow flies"; it is about local transportation and the cost of travel.

What was the second part of your question?

The Chairperson (Mr O'Toole): Is the FCA taking any specific actions? A broader piece of work is going on with LINK and Cash Access UK, but I am interested in the work that the FCA is doing, including anything that is specific to Northern Ireland.

Mr Aladhal: To clarify, LINK is part of the regime. When a community — rural or urban — believes that it has a need that is being underserved, LINK helps the banks to undertake the assessment and determine what the needs are and, through Cash Access UK, potentially fulfils those by providing a hub or otherwise. I remember now: you asked a question about financial inclusion considerations. We have been working on financial inclusion. Some of you have met my colleagues, in the past few months and in the past year, through that work. It has included working with the credit unions here on workplace savings and trying to help build and maintain financial resilience in individuals who find it hard to save. We hope to, in the summer, publish something on that work that will set out how employers can work with organisations that are based here — credit unions, banks and building societies — to provide solutions that will allow financially vulnerable individuals to build greater resilience. That is an example of how we engage in Northern Ireland and provide solutions here.

The Chairperson (Mr O'Toole): I want to move on to our specific context, which you mentioned. One way in which Northern Ireland differs from the rest of the UK is that our banking sector was anchored by four dominant players, three of which were cross-border players — they were almost all-Ireland banks, although some had distinct brands here. They were very local, and they had significantly devolved decision-making and profit-and-loss responsibilities. One of the things that has emerged in our evidence is that the traditional big four's share of retail banking in general — both personal banking and small business banking — has shrunk consistently. I am interested in whether that specific context is a concern for the FCA as regards competition. I know that you share responsibility for competition with the Competition and Markets Authority (CMA). Do you have any concern in that regard, or should we be relaxed about the traditional big four here shrinking as a proportion of the banking market?

Mr Aladhal: It has not been raised as a concern, from our perspective. We see competition with the three providers that are based in Northern Ireland, as well as the fourth, which is part of a wider UK group. Actually, that is a factor in the competition between the credit unions, the banks and other providers in this space. I would take a step back and look at the provision of accounts generally. You referenced the FCA's recent Financial Lives survey. One of the key characteristics of that is access: do individuals have access to bank accounts, and do they feel included in financial services? For us, one of the key metrics in that space is whether those who want a bank account can get one. As the Financial Lives survey sets out, we have seen that metric improve in equal measure in Northern Ireland and in the rest of the UK — it has gone up by a couple of percentage points. If I remember correctly, less than 1% of people in Northern Ireland do not have a bank account, which is an indication of healthy competition.

The Chairperson (Mr O'Toole): What is that relative to the UK writ large?

Mr Aladhal: It is very similar.

The Chairperson (Mr O'Toole): OK. On the financial resilience point, in the past week, you have published the Financial Lives survey that you referenced. I am trying to work out the percentages. I will not ask you to work out the Northern Ireland percentage for me, but the survey says that 200,000 people had no cash savings at all. We have just under two million people in Northern Ireland, so, by a very rough reckoner, we are getting on for 10% of people not having cash savings. Is there an equivalent number for the UK writ large?

Mr Aladhal: There will be, but I do not have it in front of me.

The Chairperson (Mr O'Toole): I am not trying to put you on the spot; I am just looking for a comparison.

Mr Aladhal: My memory fails me right now. There is an equivalent number, and that is why we have prioritised consumer resilience in our strategy. It is also why, in response to earlier questions, I referenced the work that we are doing on workplace savings. It is not a problem that can be solved only by the FCA. However, we recognise that we have a role to convene so that we, as part of the wider government work, non-government work, charity work etc, are playing our part to make sure that the solutions are there, hence the reference to workplace savings. Other work includes making sure that there is basic access to financial services and basic awareness of what products are available.

The Chairperson (Mr O'Toole): OK. I will bring in other members in a second, but I have another question. Departments here do not have direct policy responsibility for financial services, which is a reserved matter. It is not excepted; it is reserved, which is an important point and may be so in the future. It is critical to a number of areas of the functioning of the retail banking market here. This is the Finance Committee, but the Economy Department and the Finance Department both have a very direct interest in the functioning of the retail banking market here. Do you have much contact with those Departments? Do you view them as stakeholders, or is your work very much done through the UK Government Treasury, which is your main sponsor body?

Mr Aladhal: We maintain a permanent presence in Northern Ireland. We do so to make sure that we conduct our job well and that we understand the context that exists in Northern Ireland. That involves our engaging with various stakeholders. You will know that my colleagues have met your colleagues over the past few months and will do so again in coming months. That is part of making sure that we understand the local needs.

The Chairperson (Mr O'Toole): I will now bring in colleagues to ask questions.

Ms Forsythe: Thanks very much for joining us today. In the evidence that we have taken from charities and voluntary and community sector organisations, they have expressed concerns about the challenges that they face in accessing a lot of their banking resource because of banks closing down and bank accounts being frozen. Will you give us some detail on the work of the FCA in that space?

Mr Aladhal: Absolutely. It is a problem that we understand well. We did a number of reviews in that space. The last couple of reviews, which were done in 2023 and 2024, identified that accessing and maintaining bank accounts can be problematic for charities and other organisations. Part of the story here is about banks de-risking and making commercial decisions, as well as the perceived view on maintaining controls in respect of financial crime. The work that we published in 2023 looked at that situation and at which groups are particularly challenged. We also did an international study. We compared the problems that exist in the UK market with those in comparable markets around the world and found that similar issues exist, so the UK, including Northern Ireland, is not unique in that respect.

Continuing that work, we went further in 2024 and looked at some of the specifics and the numbers, and there was clearly a problem for charities. We cannot compel banks and building societies to open bank accounts for charities — we cannot; that is a commercial decision for them to make. However, we have used our convening power to bring together charities and those who represent charities in order to help them understand what banks are looking for in terms of the control environments and the types of questions that they ask and also to make sure that banks and their representatives in UK Finance understand how charities work and the particulars around trustees, the number of trustees etc. That convening has resulted in a number of round-tables, and some of that engagement continues. We have made it very clear to the banks that we cannot compel them to maintain or open bank accounts. If banks choose to close an account, they should carefully consider the impact on the customer — the charity — and try to make sure that the charity understands the reason behind the closure. When a bank goes through a large programme of reviews that are associated with a customer base, we actively engage with the bank to make sure that it does those properly and carefully considers its clients' needs.

Ms Forsythe: You talked about international analysis. Have you done an analysis of the different regions of the United Kingdom? Are the issues in Northern Ireland similar to those everywhere else, or is it more challenging here?

Mr Aladhal: The analysis did not separate Northern Ireland from the rest of the UK. However, the problem exists across the UK, including Northern Ireland. The ability of charities to gain and retain a bank account is an issue that is not unique to here.

Ms Forsythe: In our inquiry, we have identified a number of issues that are specific to Northern Ireland. We have specific issues with access to banking and some financial services. That aligns with the fact that charities here face additional pressures. It will be good to see what recommendations we can take forward. Thank you.

Miss Dolan: Thank you for the presentation. I represent Fermanagh and South Tyrone, and Fermanagh is a border county. Several of my constituents who work in the South and live in the North have faced challenges when trying to open a bank account due to their not being resident in the South. Are you aware of that issue? Do you know of any work that is being done to rectify it? Have you done any cross-border work with the relevant authorities or banks in the South of Ireland?

Mr Aladhal: We have engaged with the Central Bank of Ireland (CBI) and compared notes on various topics. We have not discussed that particular problem: i.e. individuals who are based in Northern Ireland facing challenges in trying to open an account in the Republic of Ireland. We will take that away for consideration. Ultimately, that issue sits outside our ability to regulate; it is for the Central Bank of Ireland. What I do know is, as I said earlier, that access to bank accounts is a problem that is not unique to the UK, hence we did the study. You will find that the Republic of Ireland has a similar issue. I will take that away.

Miss Dolan: OK. That is great. Thank you very much.

Miss Hargey: Thanks very much for your presentation and the documents that you sent us in advance. A big area that we are looking at is consumer protection. What do you see as emerging trends? What is your ability to respond to those trends? Do you see anything when you look forward, and how do you assess that?

Mr Aladhal: Do you mean general consumer trends?

Miss Hargey: Do you monitor, in respect of consumer protection, financial trends such as crypto currencies, AI and automation? Do you monitor trends to build in safeguards and mitigate risk? I am keen to understand more about that. Have you identified any particular trends?

Mr Aladhal: That is a very good question. Part of the reason that we do the Financial Lives survey every couple of years is to allow us to focus on the real challenges that exist in our communities and impact on our consumers. We talked a few moments ago about consumer and financial resilience. That is improving to some extent, but it is still a concern, and it remains an area of focus that feeds into our work in different guises. We know that some consumers are not engaging with advice on how to get the best outcomes and products, which is why we are doing work on advice and targeted support. There will be publications in that space in the summer. We know that significant numbers of consumers still fall victim to fraud and scams, and none of us is immune to that. We have done, and will continue to do, a lot of work in that space. Some of that is direct work with institutions such as banks, but some of it is indirect, where we work with law enforcement, Government Departments and other parties that have a role in this space on raising awareness, including about technology.

You mentioned crypto. There is a trend of consumers more actively putting money into a back account and/or crypto. Arguably, those consumers need a diversified portfolio and to consider other investment opportunities. We are working in that space to raise awareness of the risks of crypto and the need for consumers to consider investing for long-term resilience.

Those are general trends.

Miss Hargey: It is good that you have a focus on the North as part of your restructuring. It will be good to see what that ecosystem of support looks like here and then, if there are any gaps, to consider what more can be done between you — Financial Conduct Authority — the Consumer Council, the banks and so on to increase protection, awareness and education.

That brings me to my other question, which is on advancements in online technology. Are the protections keeping pace with advancements? Innovation can be good, obviously, but it can also have a negative side. Have you identified any gaps? With regard to your oversight, these are reserved matters, but do you feel that there are legislative gaps that need to be closed when it comes to those advancements in technology? If so, in what areas are the gaps?

The last area that I want to deal with is how we democratise financial power. I have a big issue with that. One of the criticisms of your organisation is about enforcement in the context of financial scandals, particularly those that involve big banks' treatment of consumers or Governments bailing those banks out at a cost to the taxpayer. On that issue of democratisation, you mentioned that we have credit unions and so on here. Are you having discussions about and doing research into how we can change the financial landscape to democratise it more so that people have greater oversight and accountability and there is greater knowledge of and education about financial systems for people at the grassroots? As you said, the landscape here is mostly made up of microbusinesses. How can they have greater oversight? The concern is that the big players often knock the smaller players out so that they do not get a look-in. I am keen to look at what an education programme from you on democratisation could look like. Are you looking at the financing of community cooperatives to make that type of financial lending easier — not as burdensome? The Economy Minister is looking to make changes to the regulations in the credit union landscape here in particular. Have you any experience, practical examples or areas of research? Are you even looking at that landscape?

Mr Aladhal: Thank you very much. I have a few clarifications to make, and then I will try to go into a bit of detail. The FCA has no education objective. We work with organisations such as the Money and Pensions Service (MaPS), which has an education mandate. Our focus is on making sure that it has the right insights to enable it to fulfil that mandate. We also have a focus on raising awareness. We talked about trends. We have awareness-raising programmes such as InvestSmart and ScamSmart. Those are all about helping communities and individuals to understand the risks associated with some of what is going on with technology etc, as you mentioned.

You asked for our views on legislation. I cannot speak to that. Our perimeter is set by the UK Government, and we cannot speak to legislation.

Miss Hargey: Can you not identify gaps in legislative protections, though?

Mr Aladhal: Every year, we publish a perimeter report that identifies jagged edges to our perimeter and areas on which we need to focus.

Beyond that, on your wider point, I mentioned that the priorities in our strategy, which has just been launched, cover four broad areas. The strategy is about helping consumers, fighting financial crime, growth and being a smarter regulator. That, I think, should indicate to you that, across the base, we are looking at how the trends are apparent in Northern Ireland and how we are helping to address those particular areas of focus. Does that help to answer your question?

Miss Hargey: On democratisation, have you identified, or are you even looking at, how financial services can be more accountable? Obviously, in worst-case scenarios, when you look at where things go wrong, that would be a concern or a criticism. Is there enough oversight? Is there enough accountability? I suppose that it goes back to whether people have enough ownership of those assets, which are huge. They are a key plank for growth, but, when they go wrong, it is the public purse that often picks up the pieces and has to provide "social security" for financial services. Could more be done on consumer protection and that ownership of financial power, rather than just saying that the current system will regulate it? Are there changes that could happen to bring more accountability to that system?

Mr Aladhal: I assure the Committee that we maintain a very active supervisory function and a very active enforcement function. Through that supervisory function, which reports to me for retail banking and building societies, we focus on ensuring that those firms are fulfilling the obligations that they are subject to: those established in law and in our consumer protection regulations. When firms are acting particularly or significantly badly, we take enforcement actions. We have not shied away from enforcement action. If the Committee would like, we can set out the enforcement actions that we have undertaken in the last few years by way of demonstration.

Miss Hargey: My last bit on that is that even I find that a lot more people are using online banks. Is that a new sphere for you? Is there a different approach to their regulation? How are you managing that as you move forward?

Mr Aladhal: That is a really good question. We set out quite clearly that we are channel-neutral. What does that mean? We recognise that, in the world in which we live, consumers may want to engage with their bank through their branch, by telephone, online or through an app on their phone etc. Our focus and the reason why we set out the consumer duty a couple of years ago was a new obligation on those firms. The consumer duty effectively sets out an obligation on those firms to focus on an outcome that makes sure that consumers are protected, that they are preventing foreseeable harm and that they are achieving an outcome that the consumer wants. That allows us to talk to those institutions — the banks, building societies and credit unions — in a way that asks, irrespective of the channel, whether it is an app, a branch or a telephone, "Are you achieving that right outcome?".

We have done work in that space in the last year. For example, we looked at whether those institutions were providing fair value in the interest rates that they offer for cash savings: were the best rates passed on to saving accounts? We then had direct engagement with the relevant institutions and got direct feedback from them, and, looking at good and poor practice, we set out lessons that the wider market can learn from.

Miss Hargey: Thank you.

The Chairperson (Mr O'Toole): Members, please indicate whether you would like to come in before we release our friend from the FCA. One of the areas of work that is supported by the FCA, in general, is endeavouring to support growth. That will obviously include small business lending. It is not an exclusive responsibility of the FCA. The Bank of England and the Treasury, more generally, have that responsibility too.

The statistics show that Northern Ireland has a slightly lower level of what you might call "risk-taking", a slightly lower risk appetite or a slightly reduced appetite for accessing lending.
One of the things that we are trying to establish, if we can, is whether there is a barrier to finance that is making that problem worse or whether it is because we have, for example, a larger number of established family firms passed down through the generations, and people simply feel, "We don't necessarily want to go out and access more debt to grow our firm". On risk appetite, I will not ask you to comment on the kind of microeconomics of where small businesses are now, although you can if you want, but what are your observations on a UK-wide level about how well financial services, particularly as they evolve away from the traditional high street model, are supporting small and microbusinesses that, for example, might want to access finance for a range of reasons: from buying something as straightforward as a bigger shop or warehouse up to growing staffing significantly or beginning to export?

My question is really this: as financial services evolve from the traditional high street model of relationships managed by local managers towards something that is more electronically innovative, which is useful in one way but reduces the level of personal connection —

"know your customer" and all of that — what are the observations at a UK-wide level about issues that that is creating for small and microbusinesses that might want to access finance or might not know that they want to access finance but want to talk to a bank manager and grow? I would be interested in your observations about what the challenges are there.

Mr Aladhal: I will come back to you on your last point about awareness. In some ways, that is the challenge.

First of all, let me explain the FCA's remit. The FCA regulates/supervises only what we call regulated lending, which is a very small subset of overall business lending: lending of less than £25,000, lending to non-limited companies, lending to small partnerships etc. It will not therefore cover the wider perspective that you just set out.

The Chairperson (Mr O'Toole): Fair enough.

Mr Aladhal: In the past decade, not only has the appetite of the main lenders in that market changed but there are now specialist lenders that focus more on small and microbusinesses as well as medium-sized businesses. As I said, the majority of that is outside our remit. In addition to that —

The Chairperson (Mr O'Toole): Are the majority of those new entrants to the market outside the FCA's remit?

Mr Aladhal: No.

The Chairperson (Mr O'Toole): The majority of their activity is outside.

Mr Aladhal: The activity is outside.

The Chairperson (Mr O'Toole): Yes.

Mr Aladhal: Not the firms themselves.

The Chairperson (Mr O'Toole): They are regulated, but it is that specific activity below the micro-lending level to sole traders and —.

Mr Aladhal: Yes. If it is less than £25,000, it comes under our purview. We did some work on that last year, within our remit. The report was published in December, and, if you are interested, we can email it to you.

The Chairperson (Mr O'Toole): Yes, please do.

Mr Aladhal: The report looks at regulated lending to businesses and the perceived challenges around personal guarantees. In that work, we showed that there is no material issue, for example.

The Chairperson (Mr O'Toole): Was that on a UK-wide level?

Mr Aladhal: Yes, it was UK-wide. The perception is that personal guarantees are a hindrance to some sort of lending to businesses. In regulated lending, it was not apparent as an activity.

More broadly on this topic and on your last point, if you speak to those who are actively engaged in this subject matter, they will talk to you about the awareness of small and medium-sized businesses of the lending and types of lending that are available and the organisations involved. They go to a high street bank and do not get the loan that they want, in part because the high street bank may not see what it would expect. Actually, there are other providers out there, and part of the problem is how to raise awareness among those businesses.

The Chairperson (Mr O'Toole): Indeed, and that may be a specific challenge in Northern Ireland. Certainly, in some of our evidence, we heard that one possible challenge is people not being aware that they can access finance and financial services support or, perhaps, that they should or should think about it, so the Committee would welcome hearing any additional information that you have. We have multiple anecdotal sources and witnesses who said to us that there is a challenge there.

One of the features that is specific to here — it is a feature elsewhere but is particularly prominent here — is that we have a higher proportion of family-owned, multigenerational businesses that may feel that they do not want or particularly need to access finance in order to grow. That may be the right decision for those businesses.

Before we conclude, I want to go back to Jemma Dolan's point about cross-border banking and another particular context here, which is the post-Brexit context and the fact that there were always slight disruptions. Obviously, there are two different regulatory regimes and two different currencies, but those things have become harder post Brexit. I know that the FCA is not responsible for things such as passporting, negotiating market access or things like that. Clearly, however, there are relevant areas. You mentioned earlier that you work with the Central Bank of Ireland. Would the FCA be willing to look a bit further at that area and the potential for FCA scrutiny or investigation of potential issues? Time and time again, we hear about people, for example, in Jemma's constituency, who live in County Fermanagh and work in County Cavan. We could be talking about someone who has a house here and a job a few miles over there. That creates all sorts of challenges, such as that you might have two accounts — a euro account and a sterling account — with the same bank but in different jurisdictions. Previously, it was easier to have both of those accounts and go into a branch to talk to the same cashier about them. Now, you might not even have the branch, and it is a bit more challenging to access both of those services from the same bank. Is the FCA looking at that? There might be more work that you could do in that area. I am not trying to commit you to a whole strand of work, but it is a particular concern, and not just for individuals on the border but for lots of businesses that access those services. I am aware, by the way, that much of this will be the remit of the Bank of England rather than that of the FCA.

Mr Aladhal: Let me clarify a few things on client status, and then I will come back to your question. We cannot, for example, tell an overseas-based institution — you know this — whether it can or should not open an account for an individual who is based in the UK. It is not our place to do that, and we cannot mandate that. Likewise, if someone who resides outside the UK wants to open a bank account with a UK institution, that institution will find it difficult to meet that obligation unless it is regulated and supervised in that territory. In this case, we are talking about the European Union. That is the reality today.

On your point, the UK Government, as you know, are engaging with their European counterparts, and we are active in that space and supporting that work to the extent that it relates to financial services. I cannot expand beyond that, Chair.

The Chairperson (Mr O'Toole): Fair enough. I appreciate that the Financial Services and Markets Act 2023 does not enable you to give orders, as you would put it, to entities that provide financial services in different jurisdictions. I get that, and it would be improper for you to say that. That said, the financial services industry in Northern Ireland, for many people living in Northern Ireland, is inherently cross-border. The point that we are making and on which we will reflect in our final report is that there is a very particular set of needs that affects customers, sometimes in their everyday lives and often their businesses. We ask the regulators to be mindful of that to the extent that it affects those people.

It is also important to say that the banks that we are talking about are not secret organisations. Ulster Bank is not Ulster Bank now because it has divested from the South. Bank of Ireland and Allied Irish Bank (AIB) are both regulated by the Financial Conduct Authority. Those are the kinds of banks that we are talking about, because they are regulated by the Central Bank of Ireland too. They were cross-border institutions, but, post Brexit, it is harder to be a cross-border institution and to provide services seamlessly. There are other examples that are not within the purview of the FCA. For example, we hear anecdotally about certain types of client work that was previously done in Belfast for customers in Dublin. That is a staffing question for those banks, but there is a customer service issue. I do not know whether you are able to do this, but it would be helpful if you could give us an update on some of what you talked about earlier, such as the work with the CBI and any reflections that the FCA might have on where it might work, accepting and totally acknowledging that there is a clear territorial limit. We are not talking about banks in the Cayman Islands or North America; we are talking about other UK-regulated banks, such as AIB and Bank of Ireland, which are also regulated by you.

Mr Aladhal: As I said in my introduction, we established a team in retail banking specifically to look at the banks based in Northern Ireland and the unique circumstances here. We will take that away.

The Chairperson (Mr O'Toole): That would be helpful.

Mr Aladhal: Chair, I am not promising anything.

The Chairperson (Mr O'Toole): I know that you are not. Do not worry.

Mr Aladhal: We will take it away and see what we can do in terms of our engagement.

The Chairperson (Mr O'Toole): It is for politicians to make promises. Regulators enforce them. It would be helpful if you could give us an update on any specific observations, let alone takeaway actions, because that is a challenge, not just for border representatives but more generally in a post-Brexit context, yet it is not covered in any meaningful sense in the withdrawal agreement.

No other members have indicated that they wish to ask questions. We have covered a useful bit of ground. Thank you, Emad, for coming and giving evidence on behalf of the FCA. There are a few things to follow up on, but we really appreciate your giving evidence. There may be other written material that would, you think, be beneficial to the inquiry. We will correspond with you when we publish our final report, and we look forward to that in the future. Thank you.

Mr Aladhal: Thank you very much.