Financial Services and Markets Bill

Baroness Bull Excerpts

Committee stage
Monday 13th March 2023 Grand Committee

[The Deputy Chairman of Committees (Baroness Bull) (CB)]

My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Amendment 197

Moved by

--- Later in debate ---

Amendments 208 and 209 not moved.

[The Deputy Chairman of Committees (Baroness Bull) (CB)]

My Lords, as Amendment 209 has not been moved, I cannot call Amendments 210 and 211.

Amendment 212 not moved.

Theatre Tax Relief

Baroness Bull Excerpts

Thursday 9th March 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, there are two different tax credit systems, as I understand it: one for film and audio-visual and the other for theatres. Both have huge value to the sector and also to the sector’s contribution to our economy. We are committed to ensuring that they continue to be able to contribute in that way. We want to make the system as simple to operate as possible, and all suggestions for doing that are gratefully received.

[Baroness Bull (CB)]

My Lords, the creative future report from the Communications and Digital Committee of your Lordships’ House, on which I sat until recently, called on the Government to benchmark the UK’s creative industry tax-relief schemes against those of other countries that are now offering similar schemes but with more attractive rates. This includes a new theatre production tax credit from New York, which is a direct competitor. What assessment have the Government made of the threat that this kind of international competition presents to the UK’s continued pre-eminence in the creative industries?

[Baroness Penn (Con)]

The noble Baroness is right that we should think about our international competitiveness. Tax reliefs for the cultural sector are not actually that common, but she has identified one in New York. We have looked at our scheme against that and, overall, our scheme is more generous than the New York one. We are confident that it provides great support for our theatres, not just within the UK but as international competitors as well.

Financial Services and Markets Bill

Baroness Bull Excerpts

Committee stage
Monday 6th February 2023 Grand Committee

[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.

Financial Services

Baroness Bull Excerpts

Wednesday 11th January 2023 Lords Chamber

[Baroness Penn (Con)]

I would certainly be interested to hear what more could be done in that area. On ensuring that everyday banking is accessible to customers, LINK, for example, publishes on its cash locator information on ATMs with audio assistance and those that are wheelchair-accessible, so that consumers are aware of what locations are suitable for them. We are always interested to hear about what further work we can do to promote financial inclusion.

[Baroness Bull (CB)]

My Lords, the Minister mentioned the FCA consumer duty. As I understand it, that duty and the consumer vulnerability guidance deal primarily with existing customers and do not help with the issue of the poverty premium, which excludes vulnerable people and those with the least access to resources from financial products and services. Can she say how that new consumer duty will address the issue mentioned by the noble Baroness, Lady Tyler, because I do not believe they are the same thing?

Financial Inclusion in England

Baroness Bull Excerpts

Wednesday 30th November 2022 Lords Chamber

[Baroness Penn (Con)]

The noble Baroness asks a very good question, and I am afraid I will have to double-check and get back to her. The reason that it has traditionally been a DWP and a Treasury Minister is their joint role on that policy forum. It is not me in the Treasury, but I will find out who it is. The Government and others have found it a useful forum to drive forward action in this area and I am sure they will want it to continue with its good work.

[Baroness Bull (CB)]

My Lords, will the Minister say what the Government are doing to tackle poverty premium issues in financial services? We know that people on the lowest incomes pay more for credit and insurance, for instance, but issues such as this seem to be kicked between the Treasury, which says it needs more data in order to take action, and the regulator, which says that it is not within its remit to collect that data. How does the Minister expect that the new FCA consumer duty and consumer vulnerability guidance will help tackle the poverty premium, given that they deal primarily with existing customers and do not address the needs of those consumers whom the market finds more expensive and therefore less profitable to serve?

[Baroness Penn (Con)]

The Government are conscious of the poverty premium. We have used the Financial Inclusion Policy Forum as somewhere that we can bring together different actors on this. I will give some examples of action that we have taken in this area. The FCA, the regulator, has taken action on motor and home insurance to stop customers who are renewing being charged more than new customers. We have also seen the age agreement put in place for older customers to be able to access travel and motor insurance, and some work has been done with the Association of British Insurers looking at the poverty premium, specifically in the rented sector, and it has provided some recommendations to the Government that we are considering how best to take forward.