Electoral Commission: Data Breaches

Lord Bishop of St Albans Excerpts

Monday 4th September 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I am grateful to the noble Baroness for raising that point, not least since I raised it myself about 10 minutes ago when I was being briefed for this Question. There was some comfort to know, for today’s purposes, that it was not a cyber incident, but it was a very unfortunate security breach, linked, as she will know, to an FoI process error. We must learn from this. As I said in answer to the previous question, there is a combination of things that we must do to try to prevent this kind of thing ever happening again and to ensure that the impact is minimised, if and when there are breaches of the system. Obviously, that is what they are trying to do in relation to Northern Ireland.

[The Lord Bishop of St Albans]

My Lords, the stakes are very high when these data breaches take place, because they erode public confidence in allowing organisations to collect and use our private data. I am thinking in particular of the NHS, and its great reliance on data; if it can analyse and collect information, this could be of huge help in solving medical problems and curing diseases. To prevent these things in future, what is being done to ensure that the NHS computer system cannot be hacked and that people can have real confidence in it being allowed to collect their data?

[Baroness Neville-Rolfe (Con)]

I described the new, more resilient system that we have got. There is a big focus on cyber and cyberattacks; individual Government Ministers take that very seriously. We have set up a new system called GovAssure, which the Deputy Prime Minister announced in the spring, to make sure that different parts of the public sector are better prepared and able to deal with these points. The National Cyber Security Centre has been much strengthened—actually, it also does a very good job for outside organisations, as I remember from when I was involved in an NGO and on the Back Benches. We are making progress with these things. It is important that we use electronic data, as has already been said by several noble Lords. The key is to make people take the necessary steps—often personal steps—to ensure that systems are not opened up to hackers, attackers and hostile states.

House of Lords (Peerage Nominations) Bill [HL]

Lord Bishop of St Albans Excerpts

2nd reading
Friday 18th November 2022 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, there have been a number of occasions in recent years when this House has debated its make-up, its processes of nomination and its role. The test of any Bill to reform aspects of the House of Lords is surely whether it will enhance the core functions of this House; namely, to revise, to scrutinise and to ensure that the membership retains significant independence and expertise. A further useful test is whether the proposed changes are simply a response to some current problems or whether they have the potential to enhance the work of the Lords in the long term. It seems to me that, unless we are going to go for something very radical and different, this Bill meets these tests. It is modest in its proposals but I believe it is worthy of support none the less. It comes in a long line of incremental but sensible and pragmatic changes to Lords procedure and practice. I suggest that the history of Lords reform shows that incremental change tends to be the most successful.

As your Lordships will all be aware, this year marks the 175th anniversary of the Bishoprics Act—I gather that little else has been discussed in the tea rooms and bars recently. That Act for the first time placed limitations on the royal prerogative to issue Writs of Summons to attend the House, by limiting to 26 the number of Church of England Bishops who could sit as Lords Spiritual. Back then, like now, any reform brought heated debate, and although the Act passed, a Motion was carried in the House that it set

“a dangerous precedent … contrary to the privileges of the Lords Temporal as well as Spiritual.”—[Official Report, 22/6/1847; col. 797.]

I think I can announce to the House that after a careful 175-year trial period, the principle of upper caps is one we on these Benches can get behind. Though the noble Lord’s Bill does not argue for a statutory cap, I certainly welcome the proposal that the Prime Minister ought to have regard to the commission’s advice on reducing numbers, and the aim of keeping the size of this House equal to or smaller than the elected Chamber.

The Bill also invites us to think whether membership of this House is primarily an honour or an occupation. Like many supporters of the Bill, I tend towards the latter, but I think in truth it is both and neither. Service in this House is best understood, if I dare say it, as a vocation. The more we move away from that, the harder it will be to sustain what is best about this place. I do not intend to go over the relationship of recent occupants of No. 10 with non-binding convention, except to say that we have lately seen a vivid example of what might happen to long-established norms if we rely on precedent.

The Bill seems to me to be a sensible way to go about reform, banking what is best about our current arrangements while moving us closer to firming up other norms that future Prime Ministers will find it hard to ignore. I hear the concerns of some about an unelected body curtailing prime ministerial powers, and of others that before long any commission may end up appointing in its own image, but it seems to me that the Bill skilfully navigates these concerns in such a way as to limit harms. I especially welcome the stipulation in Clause 7 that

“the Commission must have regard to the diversity of the United Kingdom”

when setting future criteria for non-political nominations, and I want to see that recognised in the area of religion as well as in many other areas. I look forward to hearing your Lordships’ contributions and hope we might be able to back the Bill as it makes its way through its various stages in this House.

Heatwave Response

Lord Bishop of St Albans Excerpts

Thursday 21st July 2022 Lords Chamber

[Lord True (Con)]

My Lords, the reports were certainly shocking. At the moment, the data is provisional, but we expect there to be up to 100 damaged properties, with at least 41 damaged and destroyed in London alone. In the wildfire in Wennington, Essex, 88 properties were evacuated and 15 damaged and destroyed. Data is provisional at the moment, and we will have to watch that as it comes in.

As for what is done in individual cases, every one of those cases will vary, and I do not think that it is for me at the Dispatch Box to say what might or might not happen in the individual circumstances of a particular family whose house has been destroyed or damaged. I hope that all the authorities concerned will approach those families with the utmost sensitivity and understanding.

[The Lord Bishop of St Albans]

My Lords, it is right that we think about the effect on human beings, but these high temperatures have a huge effect on our agricultural sector, particularly on livestock. Extreme heat reduces milk yields from cattle, for example, and reduces fertility and increases the number of miscarriages. What work is being done by government scientists to prepare our agriculture industry if this continues, and what advice is being given in the short term to help our first-class British agriculture sector adapt and continue to provide the food as it does so well?

[Lord True (Con)]

The right reverend Prelate makes an important point, as did the noble Lord, Lord Krebs, earlier. I regret that I am not in possession of advice on that point at the moment, but I shall certainly pass on his comments to my colleagues in Defra, and will do so with some urgency, because he makes an extremely important point. The countryside suffers as well as the urban areas, and we need to be prudent and thoughtful custodians wherever we live.

Independent Adviser on Ministers’ Interests

Lord Bishop of St Albans Excerpts

Thursday 16th June 2022 Lords Chamber

[Lord True (Con)]

My Lords, my noble friend makes interesting suggestions, as he always does. The recent changes have potentially very much strengthened the role of the independent adviser. On the role of the Prime Minister, it was made very clear again this morning by my right honourable friend the Minister for the Cabinet Office and, as I said, in the House previously, that normally the Prime Minister would accede. The exception referred to in the House is national security, which would be in certain cases a reasonable exception.

[The Lord Bishop of St Albans]

My Lords, at a time when public trust in the integrity of the Government and public life is being deeply damaged, would it not make sense for the successor of the noble Lord, Lord Geidt, to be appointed by an independent body rather than by the Prime Minister?

[Lord True (Con)]

My Lords, the role has a particular relationship to the Prime Minister in the conduct of a unique constitutional responsibility, which is the appointment of Ministers. I agree with the right reverend Prelate that standards in public life are essential—that is always my undertaking. As the Prime Minister set out in his letter to the noble Lord, Lord Geidt, only a few weeks ago, the seven principles of public life continue to be, as the Prime Minister put it,

“the bedrock of standards in our country and in”

this Government.

Veterans’ Strategy Action Plan: Gambling Addiction

Lord Bishop of St Albans Excerpts

Thursday 27th January 2022 Lords Chamber

[Lord True (Con)]

There is a Gambling Act review, which I know that some noble Lords will feel is taking a little time. It will be, and is, the most thorough review of gambling law since the Labour Government’s Act and we need to get it right. We are continuing with that and have already taken interim action—for example, banning gambling on credit cards.

[The Lord Bishop of St Albans]

My Lords, it is absolutely right that we pay tribute to those veterans who have successfully transitioned back into civilian life, but nevertheless the research by the RAF Benevolent Fund is striking, with much higher levels of problem gambling and at-risk gambling among veterans, which we need to attend to. Are there any plans by Her Majesty’s Government to screen those transitioning back into civilian life, and to provide additional support where necessary?

[Lord True (Con)]

As I have already said, the Government are grateful to the RAF Benevolent Fund and are considering that research. The NHS long-term plan is addressing provision for those who have gambling problems, and we will continue to work to ensure that we detect and support problems where they arise. In that respect, I am on all fours with every noble Lord who has contributed so far.

Money Laundering

Lord Bishop of St Albans Excerpts

Thursday 13th January 2022 Lords Chamber

[Lord Agnew of Oulton (Con)]

I would certainly defer to my noble friend as someone who is an expert in this area, which I am not. It is extremely difficult to get the right balance in these things, because what one person would consider an intrusion, another would consider a protection. We have to remain alert and sensitive to the different forces, but what is most important is that we have a coherent system which is clamping down on an extremely complex and fast-evolving crime.

[The Lord Bishop of St Albans]

My Lords, in last year’s parliamentary debate on the Church Action for Tax Justice report Tax for the Common Good, the Minister assured us that progress was being made on reducing money laundering and financial fraud in our British Overseas Territories and Crown dependencies. Would he be able to update the House on this? If he cannot do so now, would he please write to me with information on the progress we are making?

[Lord Agnew of Oulton (Con)]

It is important to remind the House that the overseas territories are independent entities and that we cannot just force them to comply with our own regulations. But we have an ongoing dialogue with them. For example, we have a very useful exchange of information through the exchange of notes arrangements, and they have agreed to introduce publicly accessible registers of companies’ beneficial ownership. The discussions are very much ongoing and I respect the right reverend Prelate’s concern.

Money Laundering

Lord Bishop of St Albans Excerpts

Wednesday 24th November 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, the noble Lord tells only part of the story. A number of major fines have been imposed on financial institutions in the last few years: Deutsche Bank, £160 million in 2017; Standard Chartered, over £102 million in 2019; Commerce Bank, £37 million in 2020; and Goldman Sachs, £48 million in 2020. We have rigorous oversight and we continue to review it the whole time.

[The Lord Bishop of St Albans]

My Lords, earlier this year we held a debate on the Church Action for Tax Justice report Tax for the Common Good. When we discussed British Overseas Territories, we looked at the whole issue of tax havens and were assured that this was being addressed, yet the latest Pandora papers reveal that they are still used by shell companies to hide property sales and to avoid tax. Would the Minister agree that, since we are responsible for the defence of these territories, they have a duty to stop siphoning this money off from the UK?

[Lord Agnew of Oulton (Con)]

My Lords, the right reverend Prelate is right to raise the issues in the Pandora papers and the jurisdictions he refers to, but we are making steady progress in closing the tax gap. Indeed, we have closed it by nearly a third in the last 15 years. In 2005-06 it was estimated at 7.5% and in the last year, 2019-20, it was down to 5.3%. In the last 10 years we have collected some £250 billion that would have been lost if these measures were not in place.

Financial Services Bill

Lord Bishop of St Albans Excerpts

Report stage
Wednesday 14th April 2021 Lords Chamber

[Lord Leigh of Hurley (Con) [V]]

My Lords, I congratulate my noble friend the Minister on Amendment 14, as I raised that issue at Second Reading and it was very good to see it today. It shows that the Government are listening, which is very welcome. I thank him for his kind opening remarks on a number of Peers’ appearances: it was very perceptive of him. I will not repeat the sorry tale that he heard last time around, which is the reason for this amendment. He will recall that it was in response to an attempt to commit a fraud by sending me a credit card I had not requested, and that I was unable to progress matters with FOS because I was not a customer of the credit card company concerned. I had a letter from FOS, which says the following:

“The Financial Ombudsman Service must follow the rules stipulated by the Financial Conduct Authority handbook. The relevant section concerns dispute resolution—DISP—and DISP states that there are limitations to when FOS may investigate a complaint.”


This is the rule that stipulates that FOS may look at complaints only from “an eligible complainant”, and DISP 2.7.3 states:

“An eligible complainant must be a person that is … a consumer”.


The regulations go on to say that FOS may investigate a complaint from a consumer or “a potential consumer”, and that this consumer or potential consumer must have a relationship with the regulated busines. There is a full explanation set out in DISP 2.7.3 and 2.7.6 of the FCA handbook. As I did not genuinely attempt to make a credit application, I did not fit the description of consumer or potential consumer in the handbook. In his reply to me at Second Reading, the Minister said that

“it is already the case that potential customers of a firm can seek redress through the FOS scheme under the FCA’s existing rules, notably the FCA dispute resolution handbook rule. The relevant rule states that, to be an eligible complainant, a consumer must be, or have previously been, a potential customer, payment service user or electronic money holder of the firm that they are raising a complaint against”.—[Official Report, 8/3/21; col. GC 552.]

This is completely contrary to the email sent by FOS, and there is clearly misunderstanding and confusion.

My noble friend the Minister was kind enough to suggest that I could report this matter to Action Fraud, and reports received by Action Fraud are then considered by the National Fraud Intelligence Bureau. Frankly, none of that need have been necessary or would be necessary in future if my Amendment 26, the only amendment I will speak to, were adopted. I seek for it to be adopted so that, from here on in, FOS can take action against credit card companies which do not seek to verify recipients of credit cards before they are sent out. At the moment, there is no redress for anyone who receives a credit card and no one for them to complain to. I do not think they can complain to Action Fraud because the fraud was never consummated, as it were. I very much look forward to listening to his remarks at the Dispatch Box later this afternoon, given that the Government are in listening and action mode.

[The Lord Bishop of St Albans [V]]

My Lords, I shall speak to Amendment 16 and then address my own Amendment 27. The introduction of a regulatory body to oversee the rules governing the behaviour of bailiffs would greatly strengthen complaints handling for the victims of practices that fall outside the national guidelines. The FCA reported in its Financial Lives 2020 Survey that 3.8 million people in the UK are currently experiencing “financial difficulty”. It is a terrible situation that takes a significant toll on people’s health and relationships. This amendment seeks to address an important concern: the fair treatment of people by enforcement agents who collect debts, often from vulnerable people who are in grave financial distress.

The absence of an independent regulator means that, when breaches of national standards occur, any complaints will be dealt with through the company or a trade association, before possibly being passed on to an ombudsman. This is an arduous process that prevents complaints from being adequately actioned. Furthermore, these national standards are not legally binding, which obscures the extent to which an individual can seek redress. No industry is exempt from poor practice. While most enforcement agents will probably abide by national standards, nevertheless we need to make sure that they are properly regulated.

Breaches do occur, and I will quote one example provided by the charity Christians Against Poverty of a single mother of two children. This woman was living under police protection and was a regular at a food bank, and her abusive former partner had taken out £20,000-worth of debt in her name. All of this was compounded by the fact that she was caring for her critically ill mother. When visited by a bailiff on account of a parking fine that had escalated, she attempted to contact CAP so that it could explain the situation to the bailiff. At this point the bailiff became intimidating, aggressive and threatening. That is a breach of rule 21 of the national guidelines, which states:

“Enforcement agents must not act in a threatening manner when visiting the debtor”.


We need to get a balance of powers that allows enforcement officers to undertake their tasks while also protecting debtors and ensuring they have significant mechanisms to air complaints impartially and without fear.

Debt charities are already reporting rising numbers of people in financial crisis and behind on household bills such as rent and council tax because of the Covid pandemic. Given the possible upturn in the number of individuals being referred to bailiffs in the near future, now is a suitable time to explore how we can introduce a regulatory body. I hope the Government will look closely at the content of this amendment and work to correct the current imbalance.

I now turn to Amendment 27 in my name. I am grateful to the noble Lord, Lord Sikka, and the noble Baroness, Lady Bennett of Manor Castle, who have also signed it. I tabled this amendment because I believe in the positive difference that gambling blockers can make in reducing gambling harms and empowering individuals to control their own addictions. The amendment would mandate the providers of debit and credit accounts to offer opt-in gambling blockers to block gambling transactions.

As things stand, gambling blockers have widened coverage over the past three years, currently reaching around 90% of current accounts and 40% of credit card accounts. This is an achievement in its own right and should be welcomed as a positive technological aid to reduce problem gambling. While there is a still a need to close that 10% in debit card coverage, the majority of which will come from smaller banks and building societies, it is of secondary concern to the far larger gap that exists in the credit account market, where 60% of accounts are not covered by blocking options.

In April 2020, the Gambling Commission banned the use of credit cards for gambling purposes, but this is only enforceable on licensed operators. The lack of gambling blockers on credit accounts is particularly problematic as it can provide a back door for individuals suffering from gambling-related harms to use credit cards on unlicensed sites. This undermines the Gambling Commission’s own rules and unfairly benefits unlicensed operators. Even more worryingly, this blind spot provides a direct avenue for the expansion of harmful and addictive behaviour, and the accumulation of gambling debt that would not ordinarily be allowed.

With the Government’s gambling review ongoing, the emphasis should be on preventing harm, and provisions for gambling blockers would be a welcome aid in achieving this goal. Admittedly, they are not perfect; they rely on accurate merchant categorisation codes to identify gambling transactions. But this should not discount the positive part they can play. Furthermore, through greater co-operation between account providers and payment processors, a robust and data-driven system of reporting could be developed to identify unlicensed operators hiding behind incorrect merchant categorisation codes to block future transactions. With no legal requirement to provide blockers and no obligation on payment processors to diligently review the merchant categorisation codes of unlicensed operators, gambling blockers will suffer from pitfalls that could be effectively remedied through either a legislative or regulatory approach.

There are also issues this amendment does not directly deal with but deserve highlighting. Due to the entirely optional provision of blockers, there are currently no minimum standards for functionality. This is an issue when it comes to the so-called “cooling-off” or “friction” period—the time between deactivating the blocker and once again being allowed to transact for gambling purposes. As a tool that assists those suffering from gambling addiction, the ability to activate and deactivate at will renders a blocker redundant.

Of the gambling blockers currently on offer, friction periods range from instant reactivation to 48 hours. The results offered by Monzo highlight the success of stricter cooling-off periods. Its blocker, with a 48-hour cooling-off period, block around 585,000 gambling transactions per month and is active on nearly 300,000 accounts. According to its data, once it is activated, fewer than 10% of customers deactivate it. Monzo, driven by its own success, has called upon the Government to mandate that banks provide blockers and would no doubt support this amendment. However, as I have shown, it is not merely their provision that renders them successful but their architecture. A minimum cooling-off period of 24 hours would make them far more effective tools to deal with addictions.

Finally, I will add that, in a data-driven world fuelled by digital payment systems rather than the cash we used in the past, individuals should have more autonomy over how they spend their money. Aside from their benefits in combating addiction and containing the unlicensed market, gambling blockers are an example of giving customers control over their own transactions. Actions and decisions are increasingly dictated by data that is controlled, analysed and dissected by global corporations and increasingly removed from the individual. Optional transaction blockers such as those related to gambling re-empower individuals and give them a stake in this new data-driven environment.

I thank the Government for their helpful work in encouraging the major banks to introduce gambling blockers—an endeavour that has been very successful in relation to debit cards. I know from discussions I have had with the Government that they see the benefits of blockers and continue to support a voluntary rollout. This is very encouraging and I hope that as they move forward with these efforts they will take on board some of the comments made here and find ways to promote greater data sharing between payment service providers and processors to tackle the unlicensed market. However, I remain of the opinion that for products as potentially harmful as gambling there should be not only a statutory obligation to provide opt-in blockers, as stated in this amendment, but minimum design requirements so that the positive results provided by Monzo can be emulated by other account providers.

[Lord Young of Cookham (Con)]

My Lords, my noble friend Lord Leigh of Hurley made a powerful case for his amendment, as did the right reverend Prelate the Bishop of St Albans for the two amendments to which he spoke.

I will speak to amendment 37C, in my name and that of the noble Lord, Lord Blunkett. It seeks to release child trust funds worth less than £5,000 held by children with learning disabilities, without the need to go through the daunting, lengthy and at times cumbersome Court of Protection process, while at the same time offering strict safeguards to prevent abuse.

Child trust funds were launched in January 2005, and 6.3 million children in the UK born between September 2002 and January 2011 were eligible to receive vouchers from the Government to invest in the scheme. Families with children who had a disability were offered additional payments to make it more attractive for them to join the scheme and to compensate them for the additional costs that they would face.

Financial Services Bill

Lord Bishop of St Albans Excerpts

Committee stage & Lords Hansard
Wednesday 3rd March 2021 Grand Committee

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I remind the Committee of my interests as in the register. I have two amendments in this group, one on facilitation of financial crime, which is also signed by the noble Lords, Lord Hodgson of Astley Abbotts and Lord Rooker, and my noble friend Lord Thomas of Gresford, and a second amendment relating to whistleblowers.

There is much else of merit in this group. In particular I support the comments of the noble Lord, Lord Eatwell, concerning catching, and willing the means and money to catch, perpetrators of financial crime. While I have hounded the noble Lord, Lord Callanan, on this issue, I do see the point of pressing the Treasury on funding.

My amendment on the facilitation of financial crime is also about the Treasury willing the means. It is similar to the amendment tabled by the noble and learned Lord, Lord Garnier. We are not in competition; there are more noble Lords wishing to show interest in this topic than can fit on a single amendment. Unfortunately, we did not get to this amendment on Monday and my noble friend Lord Thomas of Gresford is unable to speak today. He was deeply engaged in the Bribery Act provisions, so his contribution will be missed.

In addition to the measures outlined by the noble and learned Lord, Lord Garnier, my amendment, Amendment 84, has a final paragraph that deals expressly with the conviction of a director or other manager who is proved to be responsible for the systems failure of the corporate body. A facilitation or failure to prevent amendment has a particular resonance in this Bill for two reasons: first, because the FCA has a specific remit to prevent the use of the financial system in financial crime; and secondly, because the Treasury, the sponsor of this Bill, has already availed itself of the mechanism with regard to tax evasion. As a believer in the mechanism, it seems appropriate for Treasury to avail itself of it again in relation to the financial system.

The tightening up of corporate systems against bribery following the Bribery Act is well documented, and what better way is there to enhance the reputation of the UK’s financial system at the point when it must protect and enhance its credibility than forcing similar tightening against financial crime? We already know well the reason for needing such offences. It is the old-fashioned way that criminal law works. Having to establish a directing mind is increasingly impossible given the complex board structures of large firms. Indeed, the principle of requiring a directing mind encourages what has been called “organised irresponsibility” by Pinto and Evans in Corporate Criminal Liability.

I know there is some reluctance in the Ministry of Justice, which sat on its hands for ages after its call for evidence on corporate liability, to which I made a submission, and then said there is no new evidence. That was really a bit rich, given that the call for evidence background document itself gave a good exposition of how bad matters are and of many of the reasons why evidence of failures in prosecutions is relatively scant. That is exactly why there is no new evidence—because prosecutors know they cannot succeed against large companies and give up.

Nevertheless, the issue has been sent off to the Law Commission, which has already said in its 2010 paper, Criminal Liability in Regulatory Contexts, that

“the identification doctrine can make it impossibly difficult for prosecutors to find companies guilty of some … crimes, especially large companies”.

In its 2019 paper on suspicious activity reports, it said:

“The identification doctrine can provide an incentive for companies to operate with devolved structures in order to protect directors and senior management from liability.”


The current common law “directing mind” principle is also unfairly discriminating to small businesses. The Crown Prosecution Service’s legal guidance, under “Further Evidential Considerations”, states:

“The smaller the corporation, the more likely it will be that guilty knowledge can be attributed to the controlling officer and therefore to the company itself.”


Given the general guidance for prosecution that there must be a “realistic prospect of conviction”, it is no wonder that prosecution evidence is scant and statistics show a preponderance of prosecutions against small companies. In its response to the MoJ call for evidence, the SFO said:

“In its current form, the law relating to corporate misconduct is both unjust and unfair and in need of urgent reform.”


Note the use of “urgent”, not “kick down the road”.

It is time for the Treasury to be less selfish and to help those other than the Revenue who are defrauded by expanding the use of this mechanism beyond tax collection, and to catch those threatening the integrity of the financial system by using it to commit financial crime.

My whilstleblower amendment suggests that regulators be obliged to give evidence when it is relevant to a whistleblower seeking redress in an employment tribunal. I have tabled it to probe the present state of play, which I understand is that they do not give evidence, indeed decline to do so, even when the whistleblowing has been important and valuable to them. This gives entirely the wrong message and looks like the regulators again being too cosy with the companies they regulate. If they are too frightened to be seen to disturb that cosiness, perhaps it should be made mandatory so that they cannot shy away.

The second part of the amendment suggests making it a behaviour that is not fit and proper for a person in authority to seek to identify, dismiss or penalise a whistleblower. We all know the case of Barclays CEO Jes Staley trying to identify a whistleblower and being let off with a fine that was insignificant for him, while the industry had thought it was an action bad enough to merit removal under the new senior managers regime. The net consequence is that the senior managers regime has been undermined and the regulator has again shown its fear of regulating behaviour in large banks. It would be interesting to know what special pleading went on to achieve that result. Was the PRA involved, rather like its special pleading to US regulators on HSBC? Was the Treasury involved? Whether it was or not, it was certainly a disaster. It is now time to make amends and show that the balance of protection lies with the whistleblower and not with bank executives.

[The Lord Bishop of St Albans [V]]

My Lords, I shall speak to Amendment 136, which is in my name. I tabled the amendment because of concerns about the lower levels of responsibility placed on appointed representatives and the increased risk of poor financial advice that this poses.

The objective of the senior managers and certification regime to influence an individual’s behaviour by making them personally accountable to the regulator is one that I agree with and it was the correct response to the culture that had arisen in the City of London prior to the financial crash in 2008. I know that some Members of this House have criticised the application of the senior managers and certification regime, or lack of it, by the FCA, and I agree that it is worrying. However, I do not want to comment on the effectiveness of the SMCR but to remedy an anomaly that exists within the current framework.

The SMCR currently applies to directly regulated financial advisers, yet it does not extend to those who are appointed representatives. This anomaly means that, while a directly regulated adviser carries a personal responsibility for the quality of the advice they provide to their customer, no such responsibility is incumbent upon the adviser who is an appointed representative. This is despite the reality that a customer seeking financial advice is unlikely to know the difference between the two types of adviser and the possible effects that this might have on the quality of the advice they receive.

The requirements of the SMCR mean that a directly regulated adviser faces higher costs and carries greater personal responsibility for their actions than they would if they were an appointed representative, despite doing the same job. I want to be clear that this is not to say that those advisers who are appointed fail to provide sound advice. As with most instances of malpractice within the financial advisory sector, the activity of a minority will, by virtue of their actions, tarnish the reputations of the majority of diligent advisers—whether directly regulated or appointed representatives. However, it is self-evident that lower levels of regulatory responsibility increase the risk of poor advice.

This amendment corrects that anomaly by giving the FCA the power to extend the SMCR requirements and responsibilities to appointed representatives. Currently, an appointed representative is regulated through a principal firm which carries the relevant responsibilities and is directly regulated by the FCA. Transferring responsibility from the principal firm to the appointed representative extends the current framework to this overlooked anomaly and places responsibility on the appointed representative. Rather than adding an additional regulatory burden on to the principal firms, this change would be to their benefit. Extending the SMCR to appointed representatives and making them personally responsible for their actions will significantly reduce the principal firm’s own regulatory risk.

Furthermore, it will reduce the risk of poor or reckless advice being given to consumers within the appointed representative regime and level the playing field between directly regulated advisers and those who are operating as appointed representatives. This amendment would remove the distinction—largely invisible to customers—in the regulations that oversee directly regulated advisers and appointed representatives and increase regulatory confidence in the diligence of financial advice given by all advisers.

From my conversations with individuals within the financial services, it is understood that the current regulator—the FCA—would welcome the ability to extend the SMCR to appointed representatives but currently lacks the power to do so. Although I obviously cannot speak for the FCA on this matter, or on the validity of the conversations I have had, similarly I have no reason to doubt the sincerity of its comments or concerns about the increased risk that the current anomaly poses.

This amendment would be a small but positive change to the Financial Services Bill by ensuring that robust and responsible regulation applies to all those who provide consumers with financial advice. Extending the SMCR to appointed representatives would directly benefit customers, by ensuring that all advisers have a personal responsibility for the advice provided, level the playing field between all financial advisers and reduce the risk to the customers and the relevant principal firms.

Finally—I have to confess that I am not quite sure of the proper process here—I had hoped to explore the possibility of tabling an amendment for this stage that would mandate the providers of deposit or credit accounts to provide voluntary debit card and credit gambling blockers. Unfortunately, I have simply not been able to get it ready for Committee, and I apologise for that, but I would be glad to speak with the authorities and the Minister on this amendment that I hope to bring later on.

--- Later in debate ---

The proposal in Amendment 55 is simple: it is that the costs be shared and that the secondary debt purchaser will not be able to collect more than an additional 20% of the debt plus what it paid for it. The indebted individual will know that there will be a fair and fully discharged position at the end of the period and society will be spared significant long-term costs. I beg to move.

[The Lord Bishop of St Albans]

My Lords, I am glad to speak to Amendment 55 in the name of the noble Baroness, Lady Bennett. I placed my name to this amendment because of my concerns over indebtedness and particularly over the huge growth of household debt that has occurred during the Covid pandemic. Like the noble Baroness, Lady Bennett, I thank the Centre for Responsible Credit for the work it has undertaken on this amendment.

Last year, four Christian denominations and Church Action on Poverty published Reset the Debt. It documented the astonishing growth in indebtedness that occurred during the first lockdown and the summer. At that time, there was a hope that the economy would begin to reopen and bounce back, bringing a return to normality which would allow many people to get a handle on their growing debts. Unfortunately, the second spike in infections and increases in death meant that that economic reopening failed to materialise in the way we had hoped, causing conditions to worsen for many of those in debt. Furlough has been a lifesaver for many, and I congratulate Her Majesty’s Government on that policy, but there is a well-placed fear that once the economy opens redundancies will increase further, creating extra pressures on those who are already struggling. To quote the report:

“The lockdown continues to have profoundly unequal and poverty-increasing effects”.


At the time when the report was published, 6 million people had fallen behind on rent, council tax and other household bills because of coronavirus, with low-income families particularly turning to credit cards and overdrafts simply to survive. Covid debts, although particularly damaging for the poor, have significantly affected a variety of lower to middle-income households. This is on top of the existing debt that some of these households had incurred.

Over these past months, I have been struck by the many reports that I have received from churches, chaplaincies and charities across Hertfordshire and Bedfordshire in my diocese. They all describe the huge increase in demand from foodbanks and parish pantries, along with many more people seeking advice and relief from our of services and charities. In most cases, debt is not the consequence of a single factor but has slowly built up. However, Covid has speeded things up in a terrifying way. For the absolute poorest, debt relief orders may provide a lasting reprieve after a one-year period but many other households will be much less fortunate. Those households with a disposable income level of more than £100 per month, when compared with the lowest-income quintile, face difficult decisions and may end up being placed on a statutory debt-repayment plan and, as the noble Baroness, Lady Bennett, pointed out, may endure 10 years of full debt repayment. This can be egregious when that debt has been partially or even substantially written off and sold on to the secondary market.

Debt financing plays an important role in our economy and, despite my reservations about debt recovery practices, allows firms to profit from debt, which remains an unfortunate but perhaps necessary part of our economy. However, at the same time, there needs to be a balance. When debt has been partially written off, discounted and sold on to the secondary market, there is a strong moral case to pass on some of this discount to the debtor. It would be wrong to force an individual into misery and penury for the purpose of a full debt repayment when the original creditor readily discounted the debt to shift it on to a secondary buyer.

The amendment does not bar the purchaser of secondary debt from making a profit but merely places a limitation on how much can be reclaimed, and rightfully passes on a portion of the discount to the debtor. Limiting the potential return to more than 20% could even reduce the financial risk associated with purchasing secondary debt and may produce a more co-operative and less fearful environment for debtors and the recovery of debt.

Finally, it is worth reiterating the positive financial impacts that this would have on the Treasury. Allowing the full amount to be reclaimed may enrich the owners of the debt but will certainly cost the Treasury. As the noble Baroness, Lady Bennett, points out, debt leads to horrifying social consequences, all of which cost the taxpayer. In not allowing the discounts from partially written-off debts to be given to the debtor, we would, in effect, be partially subsidising the social cost of debt, potentially to the tune of millions or perhaps even billions of pounds per annum. Given the increased debt resulting from the Covid crisis, morally it makes sense—there is also a strong economic case—to pass on the discounted price of the debt to people in severe financial difficulties and provide them with a fair debt write-down.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to follow the right reverend Prelate. We both sit on the rural action group of the Church of England. I should also declare that as a Bar apprentice in Edinburgh, one of my first duties was as a debt collector. I cannot claim that I had any particular training in that regard, and I was probably the least sympathetic at the time, given my youth and inexperience. I therefore congratulate the noble Baroness, Lady Bennett, on the research that she has carried out in preparing for the amendment and bringing it forward. I also thank the Reset The Debt campaign for what they have achieved, as well as the Church Action on Poverty campaign in bringing these issues to the fore.

It may be that my noble friend the Minister is not minded to look sympathetically on the amendment but, at the very least, I ask him whether he accepts that there is a problem that needs to be addressed in this regard, for the simple reason that there will be an uplift in council tax of some 5% in some areas. It would also seem that, as yet, we have failed to address the issue of zero-hour contracts, which remains vexatious.

In moving the amendment, the noble Baroness, Lady Bennett, referred to food banks. My experience is not that recent but occurred between 2010 and 2015, when I had cause to visit them in my area. What impressed me most is that it was often not people on benefits who used them but those in work but who did not work sufficient hours to make ends meet. This is a category of people to whom we owe something, and is an issue that should be addressed.

In particular, I ask my noble friend what instruction is given to IVAs and others that administer debt relief orders on the power they have to be more sympathetic to and imaginative about the circumstances in which debtors find themselves. Given the rather modest remit set out in Amendment 55, I hope that my noble friend might look at it fairly sympathetically. If he feels unable to support it, perhaps he will bring forward something along these lines at the next stage.

Financial Services Bill

Lord Bishop of St Albans Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 28th January 2021 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, it is right to underline the importance of the financial services sector in our country and the huge contribution it makes. There are many laudable things in this Bill: the strengthening of money laundering regulations; encouraging saving; and the creation of parity between white collar crimes, such as market manipulation, and general fraud by extending the maximum sentence.

I was disappointed, however, to hear that the Commons amendment exploring the whole issue of ethical investment with reference to genocide did not make it into the Bill. I understand the Government’s reservation—they do not want to politicise the FCA. Nevertheless, I hope that “global Britain”, as laid out by the intentions of the Bill, will also be very much “ethical Britain” as we place ourselves in the world under the new freedoms that we have. I also note, with other noble Lords, the concern that there seems to be so little clarity on the question of parliamentary scrutiny. I am sure we will return to this as the Bill passes through your Lordships’ House. Of course, fundamental to this whole future is that the FCA is adequately resourced to fulfil its task.

I touch on just one major issue, which takes up a major part of the Bill: the Gibraltar authorisation regime. The issue of Gibraltar’s lower corporation tax rate of 10% was raised during the Commons Report stage as a significant issue, and it is one that warrants raising again. During his evidence session, the Minister said that corporation tax rate was not a factor in relocation to Gibraltar. While I recognise that relocation can be costly and that operating in London has many benefits not offered by Gibraltar, nevertheless there are significant tax advantages.

This has become all too clear in another area of work that I have raised repeatedly in your Lordships’ House—the issue of the tax avoidance of many companies, including gambling firms, which are a particular focus I have had. For example, in 2019, the Daily Mail revealed that 32Red, based in Gibraltar, paid just £812,000 in corporation tax over a 10-year period—an effective UK tax rate of 3%. William Hill, with its six subsidiaries in Gibraltar, is expected to pay 12% in corporation tax in 2020. Ladbrokes Coral is not required to disclose its tax rate, but one of its two licences to operate in the UK is registered in Gibraltar. While these relate particularly to a very focused area of my interests, of course this mechanism applies equally to financial firms.

These arrangements predate our departure from the EU and, given the likelihood that Gibraltar continues to be used in this matter, I am not placing the blame on this new Financial Services Bill. However, during the progress of this Bill, there will be an opportunity to examine again what the appropriate rules would be, particularly within the financial sector, to prevent Gibraltar being simply a place where firms and companies are reducing their tax bill. Will the UK Government commit to publishing an annual report assessing the consequences of the Gibraltar authorisation regime on tax receipts from the financial industry, as well as outlining how they intend to work with the Gibraltarian authorities to ensure there is a fair tax settlement for both territories?