Public Authorities (Fraud, Error and Recovery) Bill

Debate between Baroness Fox of Buckley and Lord Davies of Brixton

Committee stage
Monday 16th June 2025 Grand Committee

[Lord Davies of Brixton (Lab)]

My Amendment 83 is a probing amendment. I want to know more about the Government’s thinking on this. As the noble Lord, Lord Vaux, indicated, this is sparked by the comments of UK Finance, which represents, broadly speaking, those who will have to comply with this legislation, interrogate customers’ bank accounts and provide the DWP with information, so its views are very germane. It submitted a briefing for Second Reading, and a number of its points still stand, except to the extent that there has been any engagement between the DWP and UK Finance since Second Reading. I would be interested if the Minister could brief the Committee.

It is still, however, relevant to mention my points. I will focus on one in particular, as my amendment does. UK Finance raised a range of concerns that need to be taken seriously. I will outline them, just to put this into context. It is concerned about the potential conflict with its duties to deal with financial crime. It regarded this as a diversion from its capacity to deal with economic crime, and it was concerned that there were insufficient safeguards for bulk data access. I would be interested if the Minister could address those issues, either now or in correspondence.

My amendment focuses on the other point that it raised. It said:

“Risks of financial harm: Tensions between the Bill and firms’ existing obligations under the FCA’s Consumer Duty and Vulnerability Guidance could result in harm to vulnerable consumers. Bad actors learn workarounds quickly, so the powers may end up impacting most acutely people inadvertently making—or subject to—errors”.


That is a massive criticism of the Bill’s provisions, and it is important that it should be addressed explicitly, either in correspondence or in reply to this debate. I want to paraphrase in very broad terms the attitude of UK Finance towards the Bill. The truth—although it would not say it in quite these terms—is that it does not like it. It wishes that it was not here because of the pressure that it would place on it in all sorts of ways. That is outlined in its briefing.

I will address more directly the issue of financial harm to vulnerable customers. The Government need to say extensively and explicitly how they expect financial institutions to reconcile their undoubted duty of care towards their customers and their obligations under the Bill. To put this into context, the Child Poverty Action Group says that

“the eligibility verification measure would mean people face more suspicionless surveillance and intrusion into their privacy simply by virtue of being benefit recipients. We believe it is fundamentally unfair and potentially unlawful to subject these families to surveillance that the rest of the population does not face, simply because they are on a low income”.

I already quoted the concerns of Helena Wood of CIFAS. There is no doubt that the provisions of the Bill will be of massive concern to individuals, and that should be a major issue in how the Government implement the Bill—I have made plain my objections in principle—and how it will be handled in relation to vulnerable customers.

I have an amendment—let us hope we get to it on Wednesday—about the affordability assessment. Having an affordability assessment is not my idea; it is in the Government’s briefing note, but they do not explain what they mean by it. We will have a debate on Monday about the nature of that affordability assessment. But that in itself will put pressure on customers. Just being there, it will create pressure, particularly for people struggling with poverty and who have problems with their mental health.

It is essential that the affordability assessment will be able to understand the individual circumstances, but the process of implementing that assessment will in itself create harm for the consumer. I cannot see an easy way through on this, but the Government need to address the issue and tell us what they will do to ensure that this conflict is avoided.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, there was extensive conversation about the role of banks in the debate on a previous day in Committee, and I probably got carried away with my own hyperbole when I said that they were being coerced into being involved, on which the noble Baroness, Lady Anderson, corrected me. However, I think we can say that they are compelled to be involved and that financial penalties, which will become increasingly punitive, will be levied if they do not do as the Government request. If they get those penalties, the cost might not be an issue but there would certainly be reputational damage. We need to have some context here and recognise that the banks are not queuing up to do this. That is an important point, which the noble Lord, Lord Davies of Brixton, has made. There is a reluctance about some of the things that are happening with the Bill, which I think the Government can admit to.

In all the literature they have produced and in conversations we have had so far, the Government have reassured those of us who are worried about privacy. We are constantly being reassured that there are limitations on the type of data the banks will share. On the other hand, the way in which the Government are dealing with that is by saying that the banks will be fined—there will be a penalty—if they overshare or if they provide inaccurate information, so I fear that this penalty will, again, have the impact of pushing the blame or responsibility on to banks for any errors.

That makes me nervous, because it is not clear to me how they will not see anyone on benefits as just a pain in the neck for them, since they will now have to go through the exercise of checking, which they are being compelled to do or they will be fined or get into trouble, and if they get the information wrong or hand over the wrong information, they can be fined again. Inevitably—this is why I am interested in these amendments—the banks will associate these eligibility verification notices and the work being asked of them for those on benefits, and they will view such people as creating more work and more jeopardy.

I also think the banks are being held responsible for things they should not necessarily be responsible for. I would be interested to know how the Minister feels, because I think it is a reasonable query at this point to ask, “Isn’t there a problem with private banks being asked to be government inspectors?” I think it was one of the MPs who said that the purpose of banks is not to act as an arm of the state. How should private banks respond to the fact that the state is asking them to do a huge amount more in relation to this clamp-down on DWP welfare fraud? It seems to me that, ultimately, we are asking the banks to do what the Government should be doing, and the banks will get the blame if things go wrong. They are the ones who will be doing the surveillance, no matter which way we look at it.