Financial Guidance and Claims Bill [Lords] DebateFull Debate: Read Full Debate
John GlenMain Page: John Glen (Conservative) - Salisbury)
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Brought up, and read the First time.
With this it will be convenient to discuss the following:
Government new clause 9—Unsolicited direct marketing: pensions (No. 2)—
‘(1) The Secretary of State may make regulations prohibiting unsolicited direct marketing relating to pensions.
(2) The regulations may—
(a) make provision about when a communication is to be, or is not to be, treated as unsolicited;
(b) make provision for exceptions to the prohibition;
(c) confer functions on the Information Commissioner and on OFCOM (including conferring a discretion);
(d) apply (with or without modifications) provisions of the data protection legislation or the Privacy and Electronic Communications (EC Directive) Regulations 2003 (S.I. 2003/2426) (including, in particular, provisions relating to enforcement).
(3) The regulations may—
(a) make different provision for different purposes;
(b) make different provision for different areas;
(c) make incidental, supplementary, consequential, transitional or saving provision.
(4) Regulations under this section are to be made by statutory instrument.
(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(6) If before the end of June in any year the Secretary of State has not made regulations under this section (whether or not in that year), the Secretary of State must—
(a) publish a statement, by the end of July in that year, explaining why regulations have not been made and setting a timetable for making the regulations, and
(b) lay the statement before each House of Parliament.
(7) In this section, “OFCOM” means the Office of Communications established by section 1 of the Office of Communications Act 2002.”
This new clause inserts a new power for the Secretary of State to make regulations (subject to the affirmative procedure) banning unsolicited direct marketing relating to pensions. If the power is not exercised by June, the Secretary of State must explain to Parliament why not. This new clause would be inserted after Clause 24.
Amendment (a) to new clause 9, in subsection (1), leave out “may” and insert “must”.
Amendment (b) to new clause 9, in subsection (1), after “pensions” insert
“and prohibiting the use for commercial purposes of information obtained by means of such direct marketing”.
Amendment (c) to new clause 9, in subsection (2)(c), leave out “and on OFCOM” and insert
“, on Ofcom and on the Financial Conduct Authority”.
Amendment (d) to new clause 9, in subsection (2)(d), after “(S.I. 2003/2426)” insert
“or the Financial Services and Markets Act 2000”.
New clause 1—High-cost credit: advice to the Financial Conduct Authority—
“(1) In exercising its functions the single financial guidance body must have regard to the effect of high-cost credit card lending on consumer protection and must produce and publish an annual assessment of any consumer detriment.
(2) The assessment under subsection (1) shall in particular consider—
(a) what level of interest and fees constitute a high-cost credit card;
(b) information provided by high-cost credit card providers to customers, and whether such information allows customers to make informed financial decisions;
(c) the impact of high-cost credit lending on levels of personal debt,
as well as any other factors that the single financial guidance body considers relevant.
(3) If the single financial guidance body considers it to be necessary for consumer protection it must advise the Financial Conduct Authority to impose a limit on the cost of specified types of credit.”
This new clause would require the single financial guidance body to consider the effect of high-cost lending using credit cards on consumer protection and produce an annual assessment of any consumer detriment from such high-cost lending.
New clause 2—Specific requirements as to the pensions guidance function: mid life reviews—
“(1) As part of its pensions guidance and money guidance functions, the single financial guidance body must provide targeted information and guidance for members of the public from the age of 50 to help them make decisions on their financial affairs.
(2) In particular, the information and guidance in subsection (1) shall include information and guidance on—
(a) increasing pension contributions in preparation for retirement,
(b) saving money in preparation for retirement, and
(c) career development and the impact of career development on financial matters including preparation for retirement.”
This new clause provides for the single financial guidance body to provide guidance to members of the public over the age of 50, to prepare them for retirement. These “mid life reviews” would provide guidance on pensions, savings, and career development.
New clause 6—Regulatory principles to be applied in respect of claims management services—
“(1) The FCA may make recommendations to the Secretary of State on regulatory principles to be applied to claims management services.
(2) The matters on which the FCA may make recommendations include, in relation to claims management services—
(a) the duties of authorised persons to act honestly, fairly and professionally in accordance with the best interests of consumers;
(b) the duties of authorised persons to manage conflicts of interest fairly, both between themselves and their clients, and between clients;
(c) other duties of authorised persons related to a duty of care towards their clients.
(3) If the FCA recommends that regulatory principles be applied to claims management services, the Secretary of State may by regulations impose such principles.
(4) The power to make regulations under subsection (3) is exercisable by statutory instrument; and an instrument containing such regulations is subject to annulment in pursuance of a resolution of either House of Parliament.
(5) In this section, ‘authorised person’ has the same meaning as in the Financial Services and Markets Act 2000, and ‘authorised persons’ shall be construed accordingly.”
This new clause would allow the FCA to recommend that the Secretary of State introduces a duty of care which would require claims management services to act with the best interests of the customers in mind.
New clause 7—Assessment of public preparedness for income shocks—
“(1) As part of its strategic function, the single financial guidance body must from time to time publish an assessment of the ability of members of the public to plan for and address sudden reductions in income.
(2) An assessment under this section must consider the impact of the work of the single financial guidance body on the ability of members of the public to plan for and address sudden reductions in income.
(3) The Secretary of State must lay before the House of Commons any assessment conducted under this section as soon as practicable after its completion.”
New clause 8—Ban on unsolicited real-time direct approaches by, on behalf of, or for the benefit of companies carrying out claims management services and a ban on the use by claims management companies of data obtained by such methods—
“(1) The FCA must, as soon as they take responsibility for claim management companies, introduce bans on—
(a) unsolicited real-time direct approaches to members of the public carried out by whatever means, digital or otherwise, by, on behalf of, or for the benefit of companies carrying out claims management services or their agents or representatives, and
(a) the use for any purpose of any data by companies carrying out claims management services, their agents or representatives where they cannot demonstrate to the satisfaction of the FCA that this data does not arise from any unsolicited real-time direct approach to members of the public carried out by whatever means, digital or otherwise.
(2) The FCA must fix the appropriate penalties for breaches of subsection (1)(a) and (b) above.”
Amendment 31, in clause 2, page 2, line 17, at end insert—
“including information about the services offered by credit unions,”
This amendment adds to the objectives of the single financial guidance body the requirement to provide information about credit unions.
Amendment 39, page 2, line 23, leave out from “accordingly” to the end of line 24 and insert—
“(da) to ensure the needs of people in vulnerable circumstances, including but not exclusively—
(i) those who suffer long-term sickness or disability,
(iii) those on low incomes, and
(iv) recipients of benefits,
are met and that resources are allocated in such a way as to allow specially trained advisers and guidance to be made available to them,”
This amendment would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what vulnerable circumstances should include.
Amendment 40, page 2, line 36, at end insert—
“(4) The single financial guidance body must ensure it communicates to consumers using its services the difference between—
(a) provision of information,
(b) provision of guidance,
(c) provision of advice.”
This amendment would require the new body to ensure that consumers are made aware of the differences between ‘information’, ‘guidance’ and ‘advice’ so that they can specify what type of services they require from the new body.
Amendment 4, page 3, line 5, in clause 3, at end insert—
“(c) advice to the Financial Conduct Authority on matters relating to high-cost credit”.
Amendment 41, page 3, line 16, at end insert—
“(6A) As part of its money guidance function, the single financial guidance body must make available financial guidance on the use of alternative sources of retirement income, including housing wealth, to enable members of the public to make fully informed decisions about pensions and retirement income.”
This amendment would place a duty on the single financial guidance body to make available guidance on alternative sources of retirement income, such as equity release. This will provide a pathway for members of the public to consider their wider assets, particularly their housing wealth, to make effective decisions about their retirement income.
Government amendment 10, page 3, line 17, leave out subsection (7) and insert—
‘(7) The consumer protection function is—
(a) to notify the FCA where, in the exercise of its other functions, the single financial guidance body becomes aware of practices carried out by FCA- regulated persons (within the meaning of section 139A of the Financial Services and Markets Act 2000) which it considers to be detrimental to consumers, and
(b) to consider the effect of unsolicited direct marketing on consumers of financial products and services, and, in particular—
(i) from time to time publish an assessment of whether unsolicited direct marketing is, or may be, having a detrimental effect on consumers, and
(ii) advise the Secretary of State whether to make regulations under section (Unsolicited direct marketing: other consumer financial products etc) (unsolicited direct marketing: other consumer financial products etc).”
This amendment makes changes to the consumer protection function to make it clearer exactly what it entails.
Amendment (a) to amendment 10, in paragraph (b)(i), leave out “from time to time” and insert
“at least once every two years”.
Amendment 34, page 3, line 34, at end insert—
“(aa) the capability of members of the public to plan for and address sudden reductions in income,”.
Amendment 1, page 3, line 39, at end insert—
“(11) In carrying out its strategic and other functions the single financial guidance body must make and publish an annual assessment of the level of different types of lending across the United Kingdom by district.
(12) The types of lending covered by the assessment in subsection (11) should include—
(a) high cost short term credit,
(b) hire purchase agreements,
(c) conditional sale agreements,
(d) open ended credit,
(e) other secured lending, and
(f) other unsecured lending.”
This amendment requires the single financial guidance body to carry out an annual assessment of the level of different types of lending in different geographical areas across the United Kingdom.
Government amendment 11.
Amendment 8, in clause 4, page 4, line 2, at end insert—
“(2A) The single financial guidance body must, within 12 months of the passing of this Act, advise the Secretary of State on how to most effectively implement bans on—
(a) cold-calling on behalf of, or for the benefit of companies carrying out claims management services or their agents or representatives, and
(b) the commercial use of any data by companies carrying out claims management services, their agents or representatives where they cannot demonstrate to the satisfaction of the Secretary of State that this data was not obtained by cold-calling.
(2B) In this section ‘claims management services’ has the same meaning as in section 419A of the Financial Services and Markets Act 2000.”
This amendment will require the Secretary of State to specifically ban cold-calling and the commercial use of data from cold-calling by claims management companies, in addition to any bans recommended by the single financial guidance body.
Amendment 9, page 4, line 4, leave out “may” and insert “must”.
This amendment will place a statutory duty on the Secretary of State to institute bans on cold-calling on receipt of advice to do so from the single financial guidance body.
Amendment 42, in clause 10, page 7, line 22, at end insert
“and to whether the standards are proportionate”.
Probing amendment. The SFGB’s standards setting powers also need to be matched with principles of good regulation, ensuring that conditions are proportionate to the benefits they are expected to bring. This would bring the Bill (impacting charities) into line standards setting and enforcement powers granted to other bodies (impacting firms) such as those granted to the FCA.
Government amendments 12, 43, 25, 44, 26 45 and 46.
Amendment 2, in schedule 3, page 45, line 8, at end insert—
17A (1) Section 165 (regulators’ power to require information: authorised persons etc) is amended as follows.
(2) In subsection (4) after paragraph (b) insert—
(c) in relation to the exercise by the FCA of the powers conferred by subsections (1) and (3), information and documents reasonably required by the single financial guidance body in connection with the exercise by the body of its functions as set out in section 3 of the Financial Guidance and Claims Act 2018.”
This amendment extends the FCA’s power to require information from authorised persons to include information required by the single financial guidance body for carrying out its functions.
Government amendments 47, 48, 28 and 29.
I thank the Minister for giving way and commend him for the action that he has taken—I am very supportive of it. He has made a good case for banning cold calling in the pensions industry and some other financial industries. The clear case for doing so has been well made, but why will the Government not go further and ban cold calling outright?
I wish to address the issues of pensions cold calling in new clause 9, wider cold calling in amendments 8 and 9, and the duty of care in new clause 6.
Let me start by saying what this Bill is about. In Committee, we heard the story of the Port Talbot shift supervisor who broke down and wept uncontrollably when he met the Pensions Advisory Service. He described how he had been conned into going down the wrong path on his pension, losing tens of thousands of pounds as a consequence. The reason why he wept, he said, was that all 20 on his shift followed his lead, and therefore they, like him, now faced a much bleaker future than would otherwise have been the case.
Pension cold calling is a blight on people up and down the UK. As the Minister has said, we all know the feeling of answering the phone to a number that we do not recognise and hearing that familiar phrase, “We believe that you have been in a car accident.” Indeed, I was heading over to one of the Bill Committee sittings when I received such a call, not having had one for some years. Someone said that they understood that I had been in a car accident. I said that, yes, I had been in an accident 38 years ago, and it was because somebody had run into the back of me. Since then, I have had two subsequent annoying cold calls, yet mine is but a minor problem. The more significant one is the 11 million pensioners who are targeted annually by cold callers. Fraudsters are making 250 million calls a year, which is equivalent to eight every second.
As the Minister knows, we have approached the cold-calling element of this Bill on a four-pronged basis: first, banning pensions cold calling; secondly, pushing for a total ban now on cold calling for claims management companies, thereby tackling the scourge of unsolicited claims head on; thirdly, banning the use of information obtained through cold calling; and, fourthly, ensuring that the strongest possible sanctions are put on those who break the ban, which means that they are struck off.
The Government’s commitment to ban pensions cold calling from June is a necessary and wholly welcome step. May I make the point—such points are not often made in the House—that the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), and the Economic Secretary to the Treasury have engaged with us, the wider community and the pensions industry? Their approach has been constructive. Together, we have come a very long way, but I hope that they will go just that little bit further. Our amendments would tighten the provisions around the ban and ensure that it is fit for purpose. The dual additions of making it an offence to use the information obtained through cold calling and conferring functions on to the Financial Conduct Authority would mean that the ban could be much tighter and more effective.
Although the original clause means that the “introducers” who tend to commit a lot of cold calling in cases such as the British Steel scandal would not be restricted, as they are not covered by the FCA, our amendment would restrict them. The move to ban the use of the information means that those firms which provide financial services and are covered by the FCA will be banned from using the information that the “introducers” gather. This slight shifting of the ban is designed to strengthen it further, as the FCA has much stronger powers than the Information Commissioner’s Office and can strike off members who contravene the rules. We therefore hope that Ministers will reflect further on this.
I now move on to cold calling more widely. A crucial issue on which the Minister has touched is the speed with which we now act. It is not only pensions where cold calling has a negative impact. There are many other industries that have been blighted by cold calling that creates serious consequences for innocent consumers. It is common for claims management companies to try to harvest cases for road traffic accidents and holiday sickness. Unfortunately, and extraordinarily, the UK has become the world leader for holiday sickness claims. The Association of British Travel Agents said that there were about 35,000 claims of holiday sickness in 2016, which represents a 500% rise since 2013. One in five Britons—19%, or around 9.5million people—has been approached about making a compensation claim for holiday sickness. Statistics from just one tour operator, in July and August, show that there were 750,000 travelling British customers, 800,000 Germans and 375,000 Scandinavians. The Scandinavians lodged 39 claims for holiday sickness and the Germans filed 114. The Brits put in just under 4,000 claims.
Break in Debate
I absolutely agree. Surely a better solution to this issue is to have an outright ban on cold calling in personal injury claims by claims management companies, which is exactly what amendments 8 and 9 would do.
New clause 4 gives the single financial guidance body the ability to advise the Government if it considers a ban on cold calling by CMCs to be necessary. If the Government receive such advice, the Bill gives the Secretary of State the power to impose such a ban. However, the Bill does not compel the single financial guidance body to give such advice in relation to cold calling; nor are the Government required to act if they receive advice.
Although the Government have promised decisive action from the outset, I am concerned that the Bill is filled with ifs, buts and maybes and still falls far short of a ban on cold calling. Amendment 8 would commit the single financial guidance body to advise on how best to implement a ban within 12 months of the Bill being passed, and amendment 9 would require the Government to act outright and impose the ban. A ban on cold calling commands support from over two thirds of the population. We must respond to that and strengthen the Bill by agreeing to amendments 8 and 9, to see through a complete and necessary ban on cold calling.
On amendment 39, tabled by the hon. Member for Airdrie and Shotts (Neil Gray), the Bill already explicitly states that one of the body’s objectives is to support people in vulnerable circumstances when exercising its functions. That was agreed after discussion in the Lords. The Government think that for the body to have specially trained advisers and guidance risks being too prescriptive on the face of the Bill. Defining “vulnerable circumstances” could narrow the body’s remit and prevent it from addressing other vulnerabilities in the future.
Break in Debate
In the spirit of being able to get on to the next group, we welcome the ban on pension cold calling. We have sought to extend that ban to all cold calling. If the Minister is prepared to have discussions at the next stages, and before the Bill concludes its passage through Parliament, we would be prepared not to oppose Government amendment 11 or to move our amendments 8 and 9.
If the Minister’s optimism is misplaced on not accepting the amendments that I spoke to on behalf of the Select Committee, will he consider moving to secondary legislation?
Break in Debate
I am grateful to you, Madam Deputy Speaker.
I am concerned about the charges that those people will face, and about the drop in their income from the loss of wages and benefits that people could experience as a result of being in in-patient care or crisis care in the community. Thousands more in the devolved nations, and those who are receiving mental health crisis support in the community, will be in a similar position. The additional anxiety and stress that those people experience as a result of those financial pressures not only threaten to undermine their recovery but make it much less likely that they will be able to repay their debts. The requirement for people in that situation to seek advice before they can benefit from a breathing space creates a barrier, and that barrier must be removed if the new scheme is to fulfil its purpose of protecting the most vulnerable customers.
Amendment 5 represents the first step towards rectifying this issue. It ensures that when the Secretary of State seeks advice from the new single financial guidance body on the establishment of a debt respite scheme, it will include advice on specifically how the scheme will protect recipients of mental health crisis services, and information on which services should be considered to be mental health crisis services. We propose that this should include psychiatric in-patient facilities and community crisis teams. Amendment 6 takes this further by ensuring that the regulations to establish the debt respite scheme specifically provide protection and help to individuals in receipt of mental health crisis services, irrespective of whether those individuals have formally accessed debt advice. Amendment 7 would provide the baseline definition of an NHS mental health crisis service.
Targeting these interventions towards people with mental health problems will have far-reaching positive consequences. People experiencing mental health problems are significantly more likely to be in financial difficulty than the rest of the population, and half the people in problem debt are also experiencing mental ill health. The number of people receiving NHS crisis care services is also likely to be relatively small, and a high proportion—at least a quarter—are likely to be in financial difficulty. Furthermore, people experiencing a mental health crisis are likely to experience problems with their cognitive and psychological functioning as a direct consequence of their illness and are therefore highly unlikely to be able to seek debt advice and access breathing space through regulated debt advice.
How will the system work in practice? We suggest that a person entering the care of a psychiatric in-patient facility or crisis team in the community would be supported to access breathing space if appropriate. That could take the form of a certificate or a stamped-and-dated letter confirming that the service user is in receipt of mental health support during a crisis and should have breathing space applied. Many clinical mental health professionals are currently fighting fires before they can help their patients with their mental health. They are writing to creditors, calling bailiffs and completing reams of financial paperwork, and the changes that I am proposing would simplify things for those professionals, allowing them to focus on their day job. It would also reduce demand on mental health services, as research shows that people who are not in problem debt are much more likely to recovery more quickly and less likely to experience mental health problems in the future.
It is important to acknowledge that the proposed changes would not apply in Scotland, which already has a debt arrangement scheme that would require separate legislation to amend. However, we hope that the successful implementation of our proposals could provide the case for similar reforms in Scotland.
I am incredibly grateful to the Minister. What he has just shared with the House has been missing until now and will make a tangible difference to at least 23,000 people a year. I am grateful for the commitment that he has made. I was going to say in conclusion that amendments 5, 6 and 7 would prevent tens of thousands of people experiencing a mental health crisis from missing out on the protections that breathing space has to offer, which I welcome, because they are too ill to seek debt advice, so I again welcome what the Minister said, because it is critical that that most vulnerable group is not ignored.
Yesterday, the hon. Member for Plymouth, Moor View (Johnny Mercer), Martin Lewis of Money Saving Expert and I joined two people with lived experience, Lee and Susan, to hand in a petition of over 10,000 people who support the campaign. This is a truly cross-party effort, and the right hon. Member for North Norfolk (Norman Lamb) and I have campaigned long and hard. Mental health does not discriminate, and one day one of us in this Chamber could need to access a scheme such as breathing space. It could make a difference for any one of us. I am grateful that the Government have acknowledged the need to ensure that the scheme reaches everyone who needs it, particularly the most vulnerable, and tackles and addresses the impacts of mental health and debt, and I again welcome what the Minister has committed to this afternoon.
We may not get a chance to discuss the amendments supported by the Work and Pensions Committee, so will the Minister give the same undertaking that he will introduce secondary legislation if our worries prove valid?
It has been good to join the hon. Members for Liverpool, Wavertree (Luciana Berger) and for Plymouth, Moor View (Johnny Mercer), and many others, in tabling our amendments. I very much welcome the Minister’s response.
People often get into a vicious circle, with mental ill health leading them into debt because they neglect vital things and the pressure of those debts intensifying their mental ill health. Kenny Johnston, an inspiring man who set up the charity Clasp and who walked out of darkness to build solidarity for people experiencing mental ill health and suicidal ideation, went through eight years of battle with a bank on mortgage arrears that were started by mental ill health, resulting in two suicide attempts—there was constant pressure on him over that eight-year period. This measure will make a difference. It will help, and it is good the Government have been prepared to listen.
It is important to understand that this is not a panacea. I encourage the Minister also to recognise that there are very many people beyond the scope of clauses 19 and 20, such as people in in-patient care and people supported in the community, who are still experiencing mental ill health and who may end up at risk of suicide because of debt. It is important to get the message out and to establish proper processes in companies, particularly financial services companies, to treat people with mental ill health in an appropriate way in order to protect vulnerable citizens.
Legislation is already in place. The Equality Act 2010 contains a duty to consider reasonable adjustments for people who suffer from a disability, which can include mental ill health, and it is important that we spread best practice much further. I welcome the measure, but it is a start and we need to do much more to protect people’s lives.