Financial Services Bill

Baroness Meacher Excerpts

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

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, I am delighted to follow the noble Baroness, Lady Morgan, in this debate on this group of amendments. I shall make particular reference to Amendments 52 and 67, introduced by the noble Baroness, Lady Coussins, and spoken to already by various noble Lords.

Clause 34 gives the Government powers to introduce a statutory debt repayment plan scheme, which is very welcome and which other noble Lords have already endorsed. It will significantly improve the protections offered to people in debt, who will be able to repay what they owe but over a longer timeframe. Like many noble Lords, I have received a briefing from the Money Advice Trust, which would like the Government to commit to a firm timetable for the scheme’s introduction. Hence, I support Amendment 52, which is a tidying-up amendment, and Amendment 67, which provides a timetable.

Amendment 52 and 67, tabled by the noble Baronesses, Lady Coussins and Lady Morgan, and the noble Lord, Lord Rooker, and spoken to by the noble Lord, Lord Holmes, would put a timetable for the introduction of statutory debt repayment plans in the Bill. The pandemic will have accentuated debt problems faced by businesses in the small to medium-sized sectors as well as by many individuals who are facing unemployment, the true number of whom will not be revealed until furlough ends. The noble Baroness, Lady Coussins, referred to the number of people—3.8 million, I think—who have missed payments during the pandemic. In fact, 3.2 million people struggle to make ends meet. Those are unacceptable, but realistic, figures that all of us must address, particularly the Government. It is vital that a scheme is put in place with a definitive timetable to enable debt repayment plans.

It is important that the Minister demonstrates support for these amendments and other amendments in this group which would add a requirement to the Bill that statutory debt repayment plans come into force, as per Amendment 67, by 1 May 2024 at the latest. That would provide time to develop and pass regulations and to set up the required systems and infrastructure to deliver the scheme while ensuring that introducing it remained a clear priority for the Treasury. I urge the Minister to set out a clear timetable today and to indicate that the Government will accept these amendments. Will he now commit to adding a timeframe for their introduction to the Bill, with the Covid-19 crisis producing so many financial challenges for people? As we heard earlier, many of those people have been subjected to sharks, moneylenders and tricksters, as the noble Lord, Lord Holmes, referred to. Ordinary people who find themselves in debt and find it difficult to repay it must be protected, and the best way to do that is to provide that date in the legislation. I know many people have faced financial challenges, so I ask the Minister to assure the Committee that introducing statutory debt repayment plans will remain an absolute priority for the Treasury, accompanied by the date of 1 May 2024.

[Baroness Meacher (CB) [V]]

My Lords, along with StepChange and many others working in the debt field, I welcome Clause 34, which I hope will provide some support and protection for vulnerable people with problem debts. I also very much welcome the amendments in the names of the noble Baronesses, Lady Coussins and Lady Morgan. I will not speak to those amendments, because all the main points have been extremely well made by the two Baronesses. However, I have the permission of the Government Whips Office—

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Baroness Meacher, forgive me, we are about to go into a Division, so if you will allow us to have an Adjournment for five minutes then we will return to your speech.

[Baroness Meacher (CB) [V]]

Okay.

[The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)]

Get your finger ready for button pressing.

--- Later in debate ---

[Baroness Meacher (CB) [V]]

My Lords, I will start my sentence again. I have the permission of the Government Whips’ Office to speak to Amendment 136F in my name, which should be in this group but appears elsewhere. I have only just managed to table this amendment, and therefore other noble Lords have not had time to put their names to it, but I thank the noble Baroness, Lady Morgan, for expressing her support.

Amendment 136F seeks to introduce independent regulation for bailiffs and bailiff companies. The amendment builds on a Ministry of Justice review of bailiff issues that began in 2018, although we still await the report. The amendment does not specify who should regulate the industry, other than it should be subject to statutory regulation. It seems to us that is the job of the Treasury and the MoJ to work together to establish an appropriate framework. I want to give the Minister the opportunity to commit to meaningful reform, and I hope that he will be able to respond to that.

As noble Lords will know, bailiffs’ powers are quite extraordinary: to enter a person’s home, in some circumstances forcibly; to take possession of belongings as security against debt repayments; and, in extremis, to seize those goods. Of course, it is important that the law supports creditors to recover money owed to them, but it is equally important that the law should regulate debt recovery action, with controls to protect people who are vulnerable and those in financial difficulty from further hardship and harm. At the moment, there is a tremendous amount of further hardship and harm.

The Government recognise the importance of this in numerous places. We have debated Clause 34 concerning a debt respite scheme to protect the financially vulnerable. The Government have equipped the Financial Conduct Authority with the resources and powers to supervise firms’ conduct and ensure that key consumer protection issues, such as affordability and vulnerability, are taken into account. There are binding rules and standards on debt recovery action, a toolkit of sanctions and an accessible consumer redress scheme. All these factors prove strong incentives for firms to abide by the rules. However, despite bailiffs having the most intrusive and potentially harmful powers, there is no similar effective framework of oversight for bailiff enforcement. This is surely a glaring anomaly, which should be rectified in the Bill.

Bailiff enforcement is not a small matter. It is very common, particularly among public sector creditors. Research for the Money Advice Trust found that local authorities alone had referred 2.6 million debts to bailiffs in 2018-19. As Citizens Advice has shown, the number of people facing bailiff enforcements for small amounts of unpaid council tax debt is likely to double as a result of the pandemic to more than 3 million households. A significant proportion of those people will be in very vulnerable situations. Some 40% of people with bailiff issues helped by Citizens Advice have a disability or a long-term health condition, and 58% of StepChange clients with an additional vulnerability were subject to bailiff action on their council tax arrears.

Financial Services Bill

Baroness Meacher Excerpts

Report stage
Wednesday 14th April 2021 Lords Chamber

Moved by

[Baroness Meacher]

16: After Clause 40, insert the following new Clause—
“Regulation of bailiffs and bailiff firms for the purpose of taking control of goods
In section 22 of the Financial Services and Markets Act 2000 (regulated activities), after subsection (1B) insert—“(1C) An activity is a regulated activity for the purposes of this Act if it is an activity described by Part 3 of the Tribunal, Courts and Enforcement Act 2007 (enforcement by taking control of goods) performed as a service by way of business specified in an order that may include provisions in respect of—(a) defining the people, organisations and activities under Part 3 of the Tribunal, Courts and Enforcement Act 2007 which may or may not be regulated under this section;(b) delegating some or all of the functions of the FCA in respect of this regulated activity to another person or body, either existing or established by an order under this section;(c) setting out which parts of this Act may or may not apply in respect of activities regulated by this section;(d) making such supplemental provisions as necessary to carry out the functions of the regulator.(1D) If an order under subsection (1C) has not commenced within 2 years of the passing of the Financial Services Act 2021, an activity of the type described in subsection (1C) is to be a regulated activity notwithstanding the lack of an order under subsection (1C).””

[Baroness Meacher (CB)]

My Lords, I thank the noble Baroness, Lady Morgan, the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Stevenson, for putting their names to this amendment and for their tremendous support throughout the discussions we have had since.

Perhaps, I should begin by reminding the House what this amendment is all about, although I do not intend to repeat what I said in Committee. For many years, I have been aware of grave concerns about the operations of some bailiffs and certain bailiff companies, and the appalling experiences of some vulnerable individuals when they find themselves in debt and need help to solve their problems. I recognise that the law must support creditors in order to recover money owed; however, there has been inadequate protection of vulnerable people in financial difficulty.

I think the Government recognise that the 2014 regulations have failed to incentivise affordable repayment and to ensure consistently fair treatment of people in vulnerable situations. The MoJ review of the bailiff issue, set up in 2018, was most welcome but we are now in 2021 and, sadly, the review has not yet reported. Amendment 16 seeks to break the impasse on this issue, and I pay tribute to the Centre for Social Justice and the enforcement oversight working group for the support they have provided.

It is a remarkable first that the leaders of the enforcement and debt advice sectors have come together as part of this group, with the CSJ, to design a new oversight body for the enforcement industry. This cross-sector initiative is an important and historic breakthrough, and the group has made significant progress in developing the principles, objectives and functions of the new body, the enforcement conduct authority.

Crucial to the effect of an enforcement industry regulator is some statutory underpinning, as I know the Minister knows we feel strongly. Our amendment is designed to focus minds and take forward that vital element. All sides agree on the importance of giving the body real authority and teeth. I want to thank the noble Lord, Lord Wolfson, his colleagues and the noble Lord, Lord True, for our helpful meetings, the second meeting in particular. I also thank the Treasury and the Ministry of Justice for their constructive response to this amendment, and their commitment to build on the good faith of the industry and the advice sector and to work with the group on independent regulation.

I know that Ministers welcome the EOWG’s initiative; however, we accept the Treasury’s view that the Financial Services Bill is not the ideal vehicle for this amendment. We have also heard concerns from Ministers about putting this body on a statutory footing. I want to address that important point in a moment, but first, I want to assure Ministers that I will not be taking the amendment forward at Third Reading. We have listened to concerns about the FCA backstop, and I would be very happy to for the Government to come forward with an alternative amendment, maybe to another Bill, that removes the offending article.

I would also like to reflect briefly on how this initiative fits with the progress the Government have made in Clause 34—on the debt respite scheme—in improving protections for people in financial difficulty. This House strongly welcomed the Government’s initiative in 2018 to lay the powers for breathing space in statute through the Financial Guidance and Claims Act. It will not have passed Ministers by that they were pleased to do this before the policy framework was fully worked out, which is what we want to happen in relation to the regulator.

Let me now turn to the vital need for statutory underpinning for a new regulator. We are now two and a half years into the Government’s review of bailiff regulation, and my hope is that our amendment will have helped to focus minds on an idea whose time has come. Colleagues from across the House and across the sector are strongly united in the view that the current situation is unacceptable. We also believe that the establishment of an enforcement industry regulator without any statutory underpinning would be totally inadequate. I want to set out the reasons why statutory underpinning is so important for this industry. The enforcement industry itself is saying that statutory underpinning is essential, which should surely be sufficient proof of the veracity of this crucial point. The whole point of this initiative is to constrain the activity of offending bailiffs and bailiff companies and improve practices to a universally high standard. The EOWG has recognised that this will be much hindered without statutory oversight. Any new regulator will lack the necessary powers to achieve effective regulation without this statutory support.

I appreciate that time has been short for Ministers to consider the initiative for this Bill, but I urge the Government to reflect on what industry leaders are saying and think again. The powers to enforce firms’ compliance with regulatory standards and to sanction firms and agents who are in breach of the standards—or prohibit them from operating—are essential to protect the public from the inappropriate practices we still see. Without statutory underpinning, the independent authority of any new enforcement industry regulator threatens to be undermined. Funding for the body; access to intelligence; acceptance of standards and decisions: these all continue to be heavily dependent on voluntary consent and compliance, which is very difficult to achieve in this industry. Ministers may say, “Let’s see how voluntary regulation works”—in fact, I think that is what they are saying. I am afraid that argument does not hold water, for the reasons I have set out.

Finally, it is worth noting the strong precedent for statutory underpinning in the Ministry of Justice and Treasury spheres. To take one example, the Legal Services Act 2007 provided for the Legal Services Board to oversee approved regulators and established an independent complaints body. Given the extraordinary and necessarily intrusive powers of the enforcement sector, there is an overwhelming case for a regulator backed by statute.

To conclude, this amendment would put in place the necessary framework for the Government to make a real breakthrough to resolve a long-standing issue. The amendment has cross-sector, cross-party support; this has nothing to do with politics. All sides agree that any new body requires statutory underpinning to be effective. It is crucial that this moment of opportunity is not squandered, and I really mean a moment of opportunity. Leaders of the industry may change in a few years and we would have lost that opportunity.

I have no wish to test the will of the House on my amendment. We have listened to Ministers about having a more palliative legislative option. The Police, Crime, Sentencing and Courts Bill is coming down the track and we believe that it may offer a more suitable vehicle for reform of the enforcement industry regulatory system. However, I hope that the Minister, in winding up, will assure the House that the Treasury and the Ministry of Justice will work together with the EOWG on the necessary statutory underpinning for an enforcement industry regulator. I ask Ministers to commit now to using the PCSC Bill to build on the talks we have had on this Bill and returning to the House with their own amendment on this issue. I know colleagues will listen to the remarks of the Minister very carefully before deciding whether any further Back-Bench parliamentary involvement is needed. I beg to move.

--- Later in debate ---

[Lord True (Con)]

My Lords, I am confident that your Lordships’ Official Report is breakfast-time reading for every member of the Court of Protection, as indeed for every other citizen in this kingdom. I assure my noble friend that we will make sure that all those interested are made aware of the arguments that he and others have put before the upcoming meetings that have been referred to.

On going forward, I assure my noble friend that the Government will be happy to provide updates on progress on this matter to Parliament. We are very happy to continue the conversation with him, particularly on the issues that he has just raised.

[Baroness Meacher (CB)]

My Lords, I thank the many noble Lords who spoke so powerfully in support of Amendment 16. I also note the powerful speeches in support of the other significant amendments in this group, as has been pointed out. I reassure the noble Viscount, Lord Trenchard, that, in fact, we are very clear that the Financial Services Authority is not the right vehicle to become the regulator for the enforcement industry—we made that very clear to Ministers in our meeting, as the Minister knows, and I tried to make that clear in my speech. I am also very grateful for his response to Amendment 16 and the other amendments in the group.

Of course, the Minister will not be surprised that the many people involved in Amendment 16 will continue to work with the noble Lord, Lord Wolfson, and others to try to achieve statutory underpinning for the enforcement regulator from the start because the industry regards this as absolutely essential. We will look to the PCSC Bill as a possible vehicle for that. On that basis, I beg leave to withdraw my amendment.

Amendment 16 withdrawn.