Financial Services and Markets Bill

Baroness Tyler of Enfield Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Baroness Tyler of Enfield (LD)]

My Lords, I refer to my registered interests as president of the Money Advice Trust and as a member of the Financial Inclusion Commission. I congratulate the noble Lord, Lord Remnant, on his excellent maiden speech.

Although I welcome the Bill overall as an opportunity to strengthen and improve the regulation of the UK’s financial services, in too many places it feels like a missed opportunity. I will focus my remarks on financial inclusion, where I feel the Bill currently falls shorts in important respects. I make no apology for this emphasis, given the huge power imbalance that exists between banks and other financial services providers, who have plenty of people to speak on their behalf, and vulnerable customers, who have far less of a voice in these debates.

As highlighted so compellingly this afternoon, the lack of focus on improving the transparency and accountability of the regulators, and on giving Parliament greater powers of scrutiny, sadly runs through the Bill like a stick of rock. I hope we will be able to redress this balance as it progresses.

The 2017 Lords Select Committee on Financial Exclusion, which I had the privilege to chair, called on the Government to set out a clear strategy for improving financial inclusion in the UK. Without such a strategy, it is simply not possible to make the progress needed to ensure that everyone can access the financial services they need at a price they can afford. The committee also recommended that the Government expand the FCA’s remit to include a statutory duty to promote financial inclusion as one of its key objectives. These key recommendations were reiterated in the 2021 follow-up Liaison Committee report. I readily acknowledge that setting up a Financial Inclusion Policy Forum in response to the Select Committee report provides welcome discussion of some of these issues, but it is no substitute for a government-led strategy, alongside a regulator that has statutory responsibility for ensuring that financial inclusion plays a part in its everyday operations.

We now have the opportunity to plug the “black hole”, as I often call it, that exists between social policy and financial regulation. We have heard time and again how consumer groups are passed between government departments and the FCA, with no one institution willing to act; and how the Treasury refuses to act on well-known issues such as the poverty premium, which we have heard about this afternoon, until enough data is collected, when the only organisation able to obtain this data is the FCA, which in turn says it is not its remit to collect such data.

The Bill provides the opportunity to plug this gap and prevent the most vulnerable falling through the cracks. By giving the FCA a cross-cutting “must have regard” to financial inclusion duty, along with a requirement to publish findings, it will have the ability and incentive to ensure that the needs of those currently denied access due to affordability issues are considered. This will allow clarity on how far market regulation can address financial exclusion and where government-instigated social policy is needed. I will bring forward amendments on this in Committee.

Turning briefly to the duty of care, another Select Committee recommendation, I concur completely with the sentiments expressed by my noble friend Lord Sharkey. A consumer duty as brought forward by the FCA is not a duty of care. The former has many exemptions and does not provide wronged consumers with the right to secure monetary redress through litigation. For accountability and parliamentary sovereignty, it is a matter of real concern that, after Parliament passed the Financial Services Act, placing a duty on the FCA to consult and bring forward rules on a duty of care, it chose not to. This Bill provides an opportunity to remedy this unsatisfactory state of affairs.

Finally, I turn briefly to access to cash. I welcome the commitment to legislate to give consumers greater protection in accessing and depositing cash. It is long overdue. Difficulties in accessing cash by the 5 million people—I know other figures have been quoted, but that is the figure I have—who still rely on it have grown hugely in recent years. The UK has lost half its bank branch network since 2015 and there has been a 25% decline in free-to-use ATMs since 2018. It is a particular problem for many of the elderly, those with certain physical disabilities and mental health conditions, and those in deprived communities who are digitally excluded and financially vulnerable. I hope to see more action in this area, including extending the FCA’s remit to consider other services that should also be protected. I would like to see the Bill guaranteeing a minimum level of free cash access services and local authorities having the right to request a review of local cash provision.

Financial Services and Markets Bill

Baroness Tyler of Enfield Excerpts

Committee stage
Monday 6th February 2023 Grand Committee

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in day 4 of the Committee’s deliberations on the Bill. I declare my financial services interests as set out in the register.

I agree with all the amendments in this group. My noble friend Lord Moylan’s amendments are clear, and I ask my noble friend the Minister to answer him in the affirmative when she comes to respond and to say that legislating in this area would be helpful on whatever agenda it was measured against. He also reminded us of Sid, who was the poster child for British Gas. It seems only appropriate, in that I find myself sitting next to a former prima ballerina, for me to say that I seem to remember BT using the music from “Swan Lake” for its initial public offerings—all to the good. It must be right that people have an opportunity to take part, with all the correct safeguards and rails around it, in these activities. I very much support Amendments 55 and 241.

Similarly, I support the amendments around the “have regard” duty for the FCA. My noble friend the Minister will be familiar with these arguments; we talked about them very much in our debates on the 2021 Bill, now an Act. We have had Oral Questions and Written Questions on the subject, so she will be well rehearsed in her answer on a “have regard” duty.

For this reason, I tabled Amendment 67A. It is time for the FCA to have a financial inclusion objective. That is in no sense to fetter the regulator’s independence or existing objectives. The financial inclusion objective could only be additive and assistive to its existing objectives on consumer protection, market integrity and competition, and to any potential future objectives as set out in the Bill.

Following the intervening two years since we last discussed financial inclusion in detail on the 2021 Bill, are there now more or fewer bank branches and ATMs? Is there more or less cash acceptance and financial inclusion? Whatever government agenda we consider—growth, levelling up, or increased connectivity and creativity for our citizens, communities, cities and country—a financial inclusion objective for the FCA makes sense. Will my noble friend agree that it is now time to enable the FCA to play a spearheading role in financial inclusion, and to accept Amendment 67A?

[Baroness Tyler of Enfield (LD)]

My Lords, as this is my first intervention in Committee, I refer to my interests in the register as a member of the Financial Inclusion Commission and as president of the Money Advice Trust.

I will speak to Amendments 75 and 117 in the name of the noble Lord, Lord Tunnicliffe, to which I attached my name, and Amendment 228 in the name of my noble friend Lady Kramer, to which my name is also attached. I also support Amendment 67A in the name of the noble Lord, Lord Holmes, who we have just heard from. Indeed, I would have been pleased to add my name to his amendment had I been able to do so.

In its 2017 report, the House of Lords Select Committee on Financial Exclusion, which I had the privilege to chair, recommended on a unanimous, cross-party basis that

“the Government should expand the remit of the FCA to include a statutory duty to promote financial inclusion as one of its key objectives.”

These key recommendations were reiterated in the 2021 follow-up Liaison Committee report, so this issue has been around for quite a long time. In my view, the Bill is an excellent opportunity finally to make some progress.

Amendment 75 would mean that the FCA must “have regard” to financial inclusion in the consumer protection objective. Amendment 117 would insert a statutory duty to report to Parliament annually on the state of financial inclusion, measures that the FCA has taken, and any recommendations to the Treasury that the FCA wants to give. I know some have argued that that would be onerous. I see it as adding a critical layer of parliamentary scrutiny and accountability to discussions on financial inclusion—something, frankly, that is sorely lacking at the moment. It has been a key theme of many of our deliberations on the Bill.

Whether through a primary duty, as in Amendment 67A from the noble Lord, Lord Holmes, or as a must “have regard” duty, as in the amendment from the noble Lord, Lord Tunnicliffe, such a duty would directly remedy the fact that the FCA’s consumer duty, which we will look at in a later group, deals primarily with existing customers—a point made by the noble Lord, Lord Tunnicliffe. The consumer duty does not address the needs of the customers whom the market views as more expensive and less profitable to serve and who are therefore excluded from the market.

This proposed new duty would also future-proof policy decisions made after the Bill passes. This would ensure that financial inclusion issues, such as free access to cash, which featured so heavily in our Second Reading debate, are dealt with as they emerge rather than dragging on for years, resulting in a race against time before the cash delivery infrastructure disappears completely.

Our previous debates on people’s need to have free access to their own cash are an excellent example of how the regulator is currently unable to act early on such financial inclusion issues, because they are viewed as outside its remit. The heart of my argument is that, by giving the FCA a cross-cutting “must have regard to” duty, with a requirement to publish findings, it will have the ability, and perhaps more importantly the incentive, to ensure that the needs of those currently denied access due to affordability issues are considered.

Why is this so important? Briefly, in a competitive market firms will naturally design a market around the people who are the most profitable. Certain consumers—we need to be honest about this—are seen as not desirable. These consumers tend to be those who are the most vulnerable and equipped with the least resources. That has consequences for those on the lowest incomes: they struggle to afford or have to pay extra for particular services or products and, if they cannot, they are often unable to access these products at all and are therefore excluded altogether.

Essentially, these amendments seek to remedy that harm. We have already heard a couple of examples of this: some people are paying more for insurance because of where they live, and some are excluded from credit or are paying more for credit due to their credit rating or, frankly, because they cannot benefit from direct debits or they need to use cash. We all know what has happened with the terrible scandal of forcible entry to install prepayment meters.

I will finish by talking briefly about the black hole between the FCA and the Treasury, and why what are seen as social policy issues too often fall through the cracks. That point was repeatedly made by witnesses giving evidence to the Select Committee. In essence, the problem is that industry is just not providing products to meet the needs of all consumers, and some customers it will never be profitable for the industry to serve. If consumer representatives take the issue to the Treasury and the FCA, the Treasury says that it requires more data to act. It sends consumer representatives to the FCA, which says that it is not its responsibility to investigate issues that touch on social policy, so it sends consumer representatives back to the Treasury. That is a totally Catch-22 situation.

It is not just people like me banging on about this. I was very pleased to speak last week to a senior representative of Phoenix, a FTSE-100 company focusing on savings and pensions, which is also calling on government to add a new regulatory principle so that the regulations must have regard to the need to tackle financial inclusion. I thought it was very telling that the company saw this as critical to the growth agenda.

I want to explain briefly why I have added my name to Amendment 228 in the name of my noble friend Lady Kramer. It very ingeniously adds a clear financial inclusion element to the authorisation or renewing of a bank’s licence, while requiring the FCA to have regard to a bank’s services to low-income communities. Major banks, frankly, have had little interest in people on low incomes and were, in my view, dragged pretty reluctantly into having basic banking accounts. That has got a bit better but not an awful lot. If we use bank licences, that gives banks another way to provide such services by supporting credit unions and community banks—institutions that are often better placed to provide banking that is properly tailored to low-income and excluded people.

There is a lot of scope for expansion here. The UK has a far smaller community bank and credit union sector than many other countries. I will not go through all the figures, but certainly the penetration rates in the USA, Canada and Australia are far bigger. Having this sort of arrangement in place is also very much linked to people's desires to have continuing access to face-to-face services, something that we have heard so much about, particularly from the excluded groups, older people and others. Although the banking industry has made some limited progress in addressing this issue, particularly through the launch of shared banking hubs, it has, frankly, been pretty glacial so far. As this amendment so cleverly says, however, there are other things that banks can do to ensure the provision of services, including face-to-face services in low-income communities, and that is why I support it.

[Baroness Bull (CB)]

My Lords, I will speak to Amendment 75, to which I have added my name, and in support of Amendment 117, which complements Amendment 75 by looking to provide greater clarity and transparency on how financial inclusion issues can be effectively tackled in future. The noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Tyler, have said all there is to be said, so I will be very brief. I also support Amendment 67A in the name of the noble Lord, Lord Holmes of Richmond, which makes many of the same points.

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This whole section is very confusing. It should be redrafted as a whole rather than just having extra bits added. I urge the Government to look at that wording. I know it is hallowed by history, but it is far from clear about what it is really saying, in particular on people who have problems with their mental health.

[Baroness Tyler of Enfield (LD)]

I support Amendment 76 in the name of my noble friend Lord Sharkey, to which my name is attached. I will say briefly that I support Amendment 77, which we have just heard set out very persuasively by the noble Lord, Lord Davies of Brixton. The links between money problems and mental health are now very well established. They were covered in some detail by the 2017 Lords Select Committee on Financial Exclusion, which I have already referred to. We had a number of recommendations in this area. Five years on, the case is stronger than ever. I hope the Minister will be able to respond sympathetically to that point.

Turning to the duty of care to replace the consumer duty—indeed, having a duty of care was another of the Select Committee’s recommendations—I concur with the sentiments expressed by my noble friend Lord Sharkey. A consumer duty of the sort in the Bill and which was brought forward for consultation by the FCA is not a duty of care. The former has many exemptions and, critically, does not provide wronged consumers with the right to secure monetary redress through litigation. This point was made very compellingly by my noble friend. While the purpose of the consumer duty is to deliver improved outcomes for consumers, because the proposals are diluted from the duty of care—which was voted on in Parliament and enshrined in the Financial Services Act 2021—we have to ask why this has happened.

The external bodies calling for a duty of care, the financial services Consumer Panel, many consumer organisations and the House of Lords Liaison Committee were all clear that what they wanted was a duty of care, not a consumer duty. I would be grateful to the Minister if in summing up she can explain why this move from a duty of care to a consumer duty was made and why it was allowed to happen. In terms of accountability and parliamentary sovereignty it is of real concern that, after Parliament passed the Financial Services Act 2021, the regulator chose to consult and bring forward rules on something different. This amendment provides an opportunity to remedy a very unsatisfactory state of affairs.

In my view, the consumer duty provides little more consumer protection than is in the existing “treating customers fairly” principle. Nor do these proposals really help to rebalance the power and information imbalance between financial services providers and vulnerable customers, which is a real concern of mine. We need a convincing explanation of how the consumer duty enhances the “treating customers fairly” principle and how this new approach will provide the regulator with more of an ability to ensure better outcomes for consumers than at present. I must say that is not at all clear to me.

Finally, the problem is that, as currently drafted, the consumer duty places the responsibility on consumers to understand the benefits and risks of different products and services. There needs to be less emphasis on what consumers should be able to discern for themselves and more emphasis on what should be in place to stop firms exploiting that power and information imbalance between themselves and customers. This is something that a duty of care amendment would do.

[Lord Sikka (Lab)]

My Lords, I will speak to Amendments 229 to 231. They overlap with the amendments tabled by the noble Lord, Lord Sharkey; I congratulate him on his excellent speech and the wonderful case that he made for a duty of care.

The key theme of these three amendments is the empowerment of consumers—that is, enabling consumers to secure redress from negligent authorised persons for failure to act with due care as well as enabling them to seek compensation from regulatory bodies for their failures. Empowering consumers generates pressure points for regulatory bodies and authorised persons to ensure that they act diligently, efficiently, honestly, fairly and with some care.

The key element in these amendments is a duty of care, about which the noble Lord, Lord Sharkey, has already said a few things; I will add just a few more. The FCA has failed to carry out the mandate given to it by Section 29 of the Financial Services Act 2021. The consultation was fundamentally flawed; indeed, the wording of its questions indicated the bias against its mandate to create a duty of care.

I have time to go through only one example. Question 12 on the consultation paper was very badly designed. As an academic, I have carried out many questionnaires over the years, but I have never written a question like this with so many questions in one:

“Do you agree that what we have proposed amounts to a duty of care? If not, what further measures would be needed? Do you think it should be labelled as a duty of care, and might there be upsides or downsides in doing so?”


That is supposed to be one question. This question and the accompanying information provided in the consultation paper are severely misleading. The FCA asks, “Do you agree that what we have proposed amounts to a duty of care?” Does it not know what a duty of care is? Has nobody there ever studied any English case law from the 20th century to understand what it is? What a strange question to ask.

First, it was not for the respondents to inform the FCA whether or not it had proposed a duty of care; that was for the FCA itself to do. Secondly, if it is not a duty of care but the majority of respondents believe it to be one, does that make it so? Thirdly, if it is a duty of care but the majority of respondents believe it not to be, does that mean it is not one? It is very strange. Fourthly, if it is a duty of care then the FCA has proposed such a duty without asking the question, specifically mandated by Section 29 of the 2021 Act, as to whether there should be one. Fifthly, if it is not a duty of care then the FCA has proposed that there should not be one. If you look at it on logical grounds, none of it makes any sense. The questions and the accompanying statements do not make any sense, so the FCA has not really consulted on a duty of care.

The FCA’s consultation paper says that a duty of care “may have different meanings”—in other words, that is why it did not really want to go down that route. That is misleading. Just because the meaning of duty of care evolves does not mean that the FCA should not carry out its statutory duties. The principle of duty of care is well established in English law, especially since the 1932 case of Donoghue v Stevenson. It is found in fields as diverse as sale of goods and professional negligence, but it seems to have eluded the FCA.

The FCA has failed to create a duty of care as that phrase is commonly understood in law. What it has done is propose general rules about the level of care that must be provided to consumers by authorised persons. That is not a duty of care. Principle 2 of the FCA’s handbook does not create a duty of care because a breach of the FCA’s Principles for Businesses does not give rise to a right of private action by parties injured by a breach thereof. That has already been commented on; unless consumers can enforce something, it is not really a duty of care.

The FCA’s chair, Charles Randell, rejects the commonly accepted legal definition of the term “duty of care” and states that, for the FCA, it means nothing more than

“a positive obligation on a person to ensure that their conduct meets a set standard.”

That does not sound like a duty of care. Randell further commented in relation to the consultation paper that

“whether or not a private right of action for damages should attach to the duty … there would be alternative ways of enforcing such a duty. These include not only voluntary redress or a restitution order, but also our routine supervision and enforcement activities. And individuals have the ability to seek compensation by referring complaints to the Financial Ombudsman Service, which would have regard to the duty in its decisions.”

In a sense, I have no problem with regulatory remedies being in place in addition to the private right of action—I welcome them—but they cannot be a substitute for that right, which is what Amendment 229 calls for. There are two reasons for rejecting the FCA’s position. First, elsewhere—for example, in the sale of goods or professional negligence—a breach of a duty of care is by definition actionable, so why is that prevented in the world of finance? Why are the financial services and the FCA an exception to it? Secondly, the alternatives listed by Randell and the FCA have consistently been shown to be unsatisfactory. Individuals are therefore left in the lurch with nowhere to go.

A right of private action is desirable and creates a pressure point for financial services providers. While the consumer duty has many exclusions and qualifications I do not welcome, attaching a private right of action to it would materially strengthen consumers’ rights in relation to wrong scores and be of benefit to consumers. A right of private action would enable consumers to seek redress and compensation in the event that they are dealt with badly by a financial company. In the absence of that right, consumers, investors and pension savers remain dependent on the FCA. As we have already heard, the FCA is always dragging its feet to do anything. We need to set consumers free. In essence, I am supporting what the noble Lord, Lord Sharkey, said.

Financial Services and Markets Bill

Baroness Tyler of Enfield Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

Moved by

[Baroness Tyler of Enfield]

176: Schedule 8, page 162, line 7, at end insert—
“(1A) When exercising its functions under this Part, the FCA may issue a direction to a designated person, for the purpose of establishing a banking hub.(1B) A designated person must comply with a direction under subsection (1A).(1C) A “banking hub” is a facility which—(a) provides cash access and other basic banking services,(b) is facilitated jointly by multiple providers of such services,(c) contains private consultation spaces for users of cash access services, and(d) is established for the purpose of ensuring reasonable provision of cash access services where there would otherwise be a local deficiency of such provision.”Member’s explanatory statement
This amendment would require designated persons to comply with direction given by the FCA for the purposes of establishing banking hubs.

[Baroness Tyler of Enfield (LD)]

My Lords, this has been a wide-ranging debate and we now come to a very important group of amendments regarding access to cash and other physical banking services. Noble Lords may recall that this issue attracted a lot of interest at Second Reading and, in my view, is fundamental to financial inclusion. I remind noble Lords of my interests in the register.

I am speaking to Amendments 176 to 178 in my name. I also put my name to Amendments 180 to 184 in the name of the noble Lord, Lord Tunnicliffe. I very much look forward to hearing him speak. In addition, I am sympathetic to nearly all the other amendments in this group, which have similar aims.

My amendments are interconnected and cover face-to-face services, which the Bill does not specifically cover. Amendment 176 would require designated parties to comply with a direction given by the FCA to establish banking hubs. In short, my amendment provides, first, a high-level definition of a banking hub and, secondly, a power for the FCA to require one to be established. Without these, there is a real risk of inadequate face-to-face services being provided under the label of “banking hub”, which is not yet defined, or of no services being provided at all, despite all the warm words and promises.

I have long been a supporter of community banking hubs, as high street bank branches are disappearing at an alarming rate. To put this in context, there are currently some 5,000 branches in the country. By comparison, there were some 20,000 branches 30 years ago. Indeed, since the Bill entered Parliament on 20 July 2022, there have been 390 bank branch closures. Some estimates suggest that as many as 4,000 of the branches which still exist could close in the coming years, leaving an unrecognisable banking landscape about which customers have had no choice and no voice. It has just disintegrated before their very eyes.

Looking ahead, there could be as many as 2,000 shared banking facilities, generally referred to as community banking hubs. The importance and benefits of banking hubs, based on a full-service model—which my amendment sets out—include, first, allowing people who need or wish to speak to someone or to access physical banking services to do so. This may include people who need help and advice on complicated matters, such as loans and mortgages, or on issues such as powers of attorney, probate and third-party signature, when a family member becomes incapacitated or passes away. At moments of great emotional stress—I speak from personal experience here—people need a real human being to talk to and to navigate them through unfamiliar territory. They do not want to do this over the phone, online or in a distant town.

Secondly, for many people banking hubs could be a lifeline. We know that 5 million people still rely on cash, particularly to budget week to week. There is also a big overlap between those 5 million and the millions who are digitally excluded, deprived or otherwise vulnerable. We should not restrict the ambition of the Bill just to withdrawing cash.

Thirdly, and equally importantly, many shops are suffering. It is a challenging time on the high street. Banking hubs have been shown to improve footfall and make it easier for businesses to bank locally. Early evidence suggests that they have been welcomed in the locations where they have been installed and piloted. There is also early evidence of regeneration of the high street and of the service to individual customers. For example, the Financial Times reported that in Rochford, a local hairdresser can now stay open longer because it can bank its cash in its own town rather than having to travel. Also, Cambuslang has reported increased footfall at both the banking hub and the post office. Looking to the future, as we must, we should be using a national network of shared banking hubs to work with communities to help all our citizens to prepare to use digital services.

While there is clear potential for a major new national network of banking hubs, progress to date has been, I am sorry to say, glacially slow. We currently have a grand total of four, despite LINK, the UK’s largest cash machine network, having recommended 38 locations to receive a banking hub. There are two problems standing in the way, which this amendment addresses.

First, at present the legislation has nothing in it saying what a banking hub is. My amendment provides a broad definition that includes access, which is very important, but goes wider. Why is this important? Well, what I am calling a full-service banking hub would have a dedicated banker from your bank to offer support and advice as well as the full range of basic transactional services. There have been instances where banks have said that they are providing a banking hub when, in effect, it is a chair at the back of a church hall.

One of the big four high street banks, whose blushes I will spare—though I do not know why—set up a pop-up community service after the branch had closed. In reality, the service was advertised by a chalkboard and some flyers. It was a member of staff with a desk, a laptop and nothing else, in a small room at the back of a community centre. The banking rep could not do anything with cash, there were no cheque or printing services, and the rep could help only with very basic queries, not with actual transactions. In my book, that simply is not a banking hub.

We are told that we can expect a policy statement from the Treasury, which Amendment 181 calls for, among other things, but what guarantees do we have that it will actually provide the services that communities need? Could I ask the Minister when that policy statement will be published, what it will cover and whether we will have an opportunity to scrutinise it before the legislation reaches the statute book? I have given her notice of that question.

Secondly, given the very slow progress to date on the rollout of banking hubs, it is important for the FCA to be able to require delivery from the designated body. Delivery is a problem; as I said, of the 38 banking hubs recommended, we have only four so far. Yes, the chain of those involved in delivery is complex, with many suppliers and banks involved, as well as the Post Office, but the FCA needs to set out a clear target for rollout from the designated co-ordinating body, because without this requirement there will be endless arguments about who is responsible for what will happen, time will drag on and many communities will be left without a service.

Briefly, Amendment 177, which complements Amendment 176, relates to access to other banking activities often associated with a current account that the FCA considers to be significant. I believe that the legislation is too narrow as currently framed, as it covers only cash and would allow this to be delivered through fully automated services without real-life people present. That is not in line with the industry’s findings from the successful Rochford and Cambuslang pilot schemes that I have already talked about.

I readily acknowledge that the Bill is helpful in providing a framework to protect basic access to cash services so that the high street will still have ATMs and deposit services, which millions of people and shops rely on. However, consumers withdrawing and paying in cash also need other basic services delivered face to face. I have already talked about this, why they need it, the complexity, et cetera. If you do not have digital skills, access to broadband or appropriate devices, you often cannot use online services and increasingly face being cut off from basic financial services. The FCA must be given the powers to oversee this issue.

The amendment would give the FCA the authority to take other essential face-to-face transactions into account when it supervises banks. I am sure that none of us in this Room wants people who need face-to-face support to be left behind by an unambitious Bill. Indeed, the Bill is an ideal opportunity to protect those face-to-face services as long as they are needed, supporting millions of consumers, including the elderly and vulnerable groups, such as those with mental health problems, physical disabilities or long-term health conditions. To be absolutely clear, I am not stuck in the past. I am talking not about a bank branch on every corner but rather about protecting the core services we expect from our financial services and which many people would struggle to function without.

Amendment 178 relates to the closure of cash access services and preventing gaps in services—or banking deserts as they have been called. I have already talked about shared banking facilities and the benefits they bring to individuals and small businesses but, and this is critical, when the last bank branch announces that it is going to close, a gap rapidly opens up and leaves people simply cut adrift from vital financial and banking services. Although the existing voluntary arrangements are an improvement on what came before, they are simply not allowing for replacement services to be put in place anything like quickly enough.

The truth is that delivery is not fast enough because the incentive, frankly, is not there. In my view, the current voluntary arrangements lack teeth. I know there are some valid reasons why it is quite tricky. After all, it is a new network of services and it takes time to get these things right, particularly in relation to staffing and premises, but this is simply not acceptable for those communities where a service is recommended but not delivered. We should not accept a gap in service and nor should the FCA. The solution is simple, and this amendment would achieve it. It would give the FCA the explicit power to stop branches closing until the alternatives are in place, thereby protecting consumers, businesses and the high street.

Finally, on Amendments 180 to 182 and 184, I will simply underline the critical importance of free-to-use cash access services being in the Bill. In September 2022, there were nearly 13,000 fewer free-to-use ATMs in the UK than there were in August 2018—a decrease of nearly 25%. In contrast, there has been a much smaller decline in the number of pay-to-use ATMs. People living in the most deprived areas find it hard to access cash without incurring charges; to compound this, those on lower incomes understandably often withdraw smaller amounts of money more frequently and are disproportionately affected by flat fees, which are often in the region of £1 to £2 per withdrawal.

--- Later in debate ---

[Baroness Penn (Con)]

On interchange fees, decisions regarding the operation and funding arrangements for an ATM network are taken by the parties involved. The noble Lord will know that LINK has commitments to protect the broad geographic spread of free-to-use ATMs and is held to account against those obligations and commitments by the Payment Systems Regulator. It has specifically committed to protect free-to-use ATMs more than one kilometre away from the next nearest free ATM or Post Office and free access to cash on high streets, and it supports free-to-use ATMs in deprived areas through its financial inclusion programme.

I recognise the point that the noble Lord has made. Coming back to the provision in the Bill, while I understand that different amendments have been tabled to look at how it could be enhanced or altered, it is important to acknowledge that legislating to protect access to cash is the Government recognising the point that the Committee made and taking action to address it. We want to have flexibility in how that is delivered, but we are providing for it in primary legislation and I hope that principle is welcomed, even though there are different opinions about how it could best be delivered.

Drawing towards the end of my remarks, I was going to note specifically on accessibility that that question was considered by the most recent Financial Inclusion Policy Forum. As I was saying to the noble Lord, Lord Hunt, while the Government do not support these amendments, I hope that noble Lords recognise the action that is being taken through the Bill and elsewhere, because the Government take these issues seriously. It is right to consider the outcome that we are all trying to deliver in a changing world: accessible financial services. That can mean a range of things, such as for people on low incomes being able to budget their money or for accessibility when it comes to disability, age or other factors. The way we have tried to approach access to cash in the Bill is by looking at delivering those outcomes in a flexible way, so I hope that at the moment the noble Baroness, Lady Tyler, is able to withdraw her amendment and that other noble Lords do not press their amendments.

[Baroness Tyler of Enfield (LD)]

My Lords, it feels some time now since we started this group of amendments. I thank the Minister for her measured response in which she tried hard to reflect quite a wide range of views on the issues we have been talking about. I also thank all other noble Lords who have contributed. This has been a fascinating debate. There has been a reasonable degree on consensus in places, but by no means full consensus, and I certainly understand that.

I want to refer to a very important comment made by the noble Lord, Lord Tunnicliffe. He said that this group is different and is about whether we want a divided society. Another noble Lord said—I am sorry but I cannot remember who it was—that banks are not charities. I think we all understand that but it is for us as legislators, a point I made in my opening speech, to decide on the sort of society that we want. That is actually what this group of amendments is about.

I listened to the noble Baroness, Lady Noakes, and others, and I assure your Lordships that I am not stuck in the past. I make most of my payments by holding out my phone. However, a very helpful point was made by the noble Baroness, Lady Fox, which was that there are times when I do not want to pay like that. I still want to use cash sometimes, even though I can hold my phone out, and it is rather important that I have that choice.