Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Anderson of Stoke-on-Trent and Lord Verdirame

Committee stage
Monday 9th June 2025 Grand Committee

[Lord Verdirame (Non-Afl)]

My Lords, I did not speak at Second Reading, but the Bill has attracted my interest for the reasons a number of noble Lords have pointed out about procedure and due process. I share the concern about the risk of debanking en masse a group of individuals whom banks will view as not particularly good customers in terms of the money they deposit and as they now come with greater risks. I would also like to know what the Government’s thinking is on that issue.

Looking at this from the point of view of the bank, I am a bit concerned about the relationship between Clause 19(4) and Clause 19(10). Clause 19(4) says:

“The Minister may give an account information notice relating to an account only for the purpose of determining whether to make a direct deduction order in respect of the account”.


If the bank receives such a request for an account information notice, but for some reason considers there may be a different purpose in that request, what is the bank supposed to do? Clause 19(8) says:

“The bank must comply with a notice given under this section”.


However, Clause 19(4) puts a clear limit in terms of the lawfulness of giving an account information notice. Who is to assess whether there is any doubt as to the purpose of that account information notice?

In Clause 19(10), it says:

“Information given to the Minister in response to a notice under this section may be used by the Minister for the purpose of exercising the core functions but not for any other purpose”.


Of course, the core functions are wider than the purpose identified in Clause 19(4), which says that you can give an account information notice only for the purposes of determining whether to make a direct deduction order. But then, in Clause 19(10), that information may be used for wider purposes than enabling the taking of that decision.

That puts the bank in a bit of difficult position. It is told that it must comply with a notice but also that the notice must be only for the purposes of determining whether to make a direct deduction order. If it has any doubt, presumably it owes a duty to its customers and will have to consider how to behave in that situation. Further, it is also told that the information it will be providing may be used for wider purposes than simply the making of a direct deduction order. I would like to hear from the Government how they see the relationship between these various provisions in Clause 19, and where that leaves the bank in that kind of scenario.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, is it not always the case that you get the most difficult question just before you stand up? I am going to speak really slowly until I get a speaking note that gives me the appropriate answer.

I confirm that the Government are extremely mindful of the burdens this Bill places on business, including the banking sector. We want to ensure that it is not subject to disproportionate burdens or costs in complying with these measures. I will start by referring to the Bill’s published impact assessment, which sets out all the expected costs to businesses, including banks, of the PSFA measures. This has been green rated by the Regulatory Policy Committee and sets out the minimal expected costs to businesses where it has been possible to do so, including to banks for Part 1 of the Bill’s measures.

Throughout the development of this Bill, we have tried to strike the right balance between requiring actions from banks in a fair and proportionate way while achieving our policy intent of recouping vital public funds lost to fraud and error. This is why there has been sustained engagement with key representatives of the sector, including UK Finance, individual banks, building societies, HM Treasury and the Financial Conduct Authority. Some of this is reflected in government amendments that we will discuss later in Committee.

We know that the sector is supportive of the Bill’s objectives from the evidence provided by UK Finance in Committee in the other place. We have benefited from the sector’s operational insights, which have led us to table a number of amendments as a direct result to ease the implementation and delivery of the recovery powers. The PSFA and the DWP will, for their relevant measures, will continue to work closely with banks on the design and implementation of relevant measures, including consulting on relevant regulations.