Banking Misconduct and the FCA

John Glen Excerpts

Thursday 10th May 2018 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

First, I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing this debate and thank the Backbench Business Committee for granting it. I have listened carefully to more than 20 speeches and 30 contributions, and I would like to acknowledge the request from the hon. Member for Vale of Clwyd (Chris Ruane) and my hon. Friend the Member for Brentwood and Ongar (Alex Burghart) to address specific cases; I am happy to engage with them on that.

Considering the developments in the case of RBS Global Restructuring Group since our debate on 18 January, it is absolutely right that we revisit this important subject. As Members across the House have said, small and medium-sized businesses are the backbone of our economy—I grew up in one—and they depend on financial services providers for vital finance through lending, but those transactions must be in the strictest accordance with the law. Let me be clear: wherever that has not been the case, any business affected should be compensated.

I have listened carefully to a whole range of stories from Members this afternoon about people who have clearly been badly let down. I had the privilege of meeting hoteliers in the constituency of my hon. Friend the Member for Torbay (Kevin Foster) who were treated in an appalling fashion and given products that were clearly not suited to their needs. That has been replicated in very many cases. I have been moved by the numerous letters I have received from Members on behalf of their constituents, many of whom face significant difficulties as a consequence of their treatment by RBS GRG.

I want to reassure the House that the Government and the Financial Conduct Authority take this issue very seriously. I understand the frustration about the timing of resolution, and I want to address specifically what I have done as the Minister since January. In March I met Andrew Bailey, chief executive of the FCA, and stressed to him just how important I consider the proper and full resolution of the RBS GRG issue to be, which he agrees with. The skilled person report produced for the FCA stated that there were areas of widespread inappropriate treatment of firms by RBS. That is unacceptable.

I went on to meet the chief executive of RBS recently, to discuss the range of issues that were raised then and have been raised again today. Following that meeting, I was pleased to receive a letter from the chief executive addressing a number of the points that colleagues have raised today. RBS has committed to setting up an independent appeal process for consequential loss claims, addressing a gap that existed in the redress scheme, and it is discussing with Sir William Blackburne how that process will operate. RBS has also agreed to stand aside —rightly, in my opinion—from any money that might be returned to it from redress paid to liquidated companies and will donate that money to charities supporting small businesses. I welcome those important steps in improving the operation and transparency of the redress scheme for businesses affected by RBS GRG.

As Members will be aware, the Treasury Committee has published the FCA’s full report on RBS GRG. The FCA is now conducting the second stage of its investigation, which is a more focused investigation into the matters arising from the report. It has moved on quickly, so that we can examine the issues more quickly than if we had gone through an alternative process. I have confidence in the FCA’s approach and direction on this case. I am meeting Andrew Bailey regularly, and I hope that the FCA will conclude its investigation soon, by which I mean in the next eight to 12 weeks. As I mentioned in our debate on this topic in January, I do not wish to complicate the matter further or prejudice any outcomes while the FCA is investigating, but I am very clear that I expect it to conclude its investigations in a very short timeframe.

The FCA’s independence is vital to its role; it was vital before 2010, and it is vital now. Its credibility, authority and value to consumers would be undermined if it were possible for the Government to intervene directly in its decision making.

I would like to turn now to the broader issue of alternative dispute resolution methods between SMEs and banks and to some of the issues around professional services that were raised in the debate.

[Kirsty Blackman]

Will the Minister commit to, if possible, putting the RBS letter in the Library, so that we can all see it? Will he also ensure that when the FCA does conclude the final part of the report, we can all see the full version as soon as possible?

[John Glen]

I am grateful for that intervention. I am happy to clarify that the letter has been copied to the chair of the APPG and the Chair of the Select Committee, and I will make it more widely available.

There are already a number of avenues for SMEs seeking a resolution when dealing with their bank. Our smallest businesses have the Financial Ombudsman Service. I am of course aware of the “Dispatches” programme, and I have met the chief executive. The FOS is reviewing its operations and addressing the matters raised.

Where there are widespread issues, the FCA can ensure, and has ensured, redress through industry-wide or firm-specific redress schemes. Of course, there is also the usual legal process open to business, although I know this can be a time-consuming and costly process.

Since the last debate, the FCA has published a consultation paper on expanding the remit of the Financial Ombudsman Service, which would widen eligibility to include a greater range of SMEs.

[Joanna Cherry]

On the point about legal redress, does the Minister not appreciate that a lot of our constituents have lost everything. If they are in Scotland, they might be lucky enough to still be eligible for legal aid, but many legal aid lawyers are not equipped to take on this sort of complex action, so this is a real David and Goliath situation. That is why we need the tribunal.

[John Glen]

I acknowledge the outstanding concerns of many people across the United Kingdom, and that is why I welcome the FCA’s consultation. It is my belief that widening SME access to the FOS is the right thing to do.

[Clive Efford]

My constituents became involved in this not because they had an SME, but because they were trying to get a mortgage and were forced into this process. The mistake was made with the first loan that was given to them, but the ombudsman will not recognise that and look into it. What we need is more pressure on the ombudsman to listen to the consumer and not the banks.

[John Glen]

I listened very carefully to the case the hon. Gentleman outlined, and I recognise the challenges that the FOS has to face up to. That is why I welcome the FCA’s investigations and the FOS’s own investigation following the “Dispatches” programme.

It is important that the landscape for dispute resolution for SMEs does not discourage or inhibit the ability of banks and small businesses to resolve disputes between themselves in a satisfactory way, where possible. I therefore welcome the reviews being undertaken in this area by the APPG on fair business banking and finance—ably led by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and the hon. Member for East Lothian—and by UK Finance, as well as the Treasury Committee’s ongoing interest in this area. When the findings of these reviews are published, we will consider them carefully, along with the outcome of the FCA’s current consultation.

In the interests of time, I will briefly conclude by summarising the Government’s position. It is right that we wait for the conclusion on GRG of the FCA’s investigation of the matters arising from its skilled persons report before determining what further actions need to be taken, and I reserve judgment on what they could be.

On dispute resolution more widely, we must acknowledge the existing avenues, including the work that is going on in terms of reviewing and enhancing the Financial Ombudsman Service’s provision. The FCA is progressing its work looking at the relationship between SMEs and financial services providers, and the APPG and UK Finance are undertaking their reviews as well. In the light of all the work going on, and the imminent conclusion of it, it is important that I consider that before we take alternative routes.

Once again, I thank all Members on both sides of the House who have raised very important issues on behalf of their constituents. I remain engaged to find a solution—a solution that works for all of them.

Financial Services

John Glen Excerpts

Thursday 26th April 2018 Westminster Hall

[Alison Thewliss (Glasgow Central) (SNP)]

I am glad to be able to speak for the Scottish National party in this debate.

I am sure the Brexiteers will accuse me of not being optimistic enough, but having looked the issues for financial services in the UK post-Brexit, I cannot help but have some apprehension. I understand that a lot of people in the industry are apprehensive as well. The challenges are huge and significant.

We have the best possible set-up in financial services with the EU, whether with regard to co-operation, influence or regulation. We are part of the decision-making process and have been key players in the set-up of financial services across the EU. There is no doubt that we will not be able to replicate the influence we have, because that influence is born from being part of the EU and a member of the single market and the customs union. The UK Government must seriously consider that reckless approach. The financial services sector provides a good illustration of why remaining in the single market and the customs union is the least-damaging option for the UK’s and Scotland’s economy. Brexit is a key risk to that sector.

The financial services industry is huge—the figures were mentioned by the hon. Member for Chelmsford (Vicky Ford)—and, as she said, Scotland is a key part of it. Many financial services jobs are outside London. Edinburgh has 49,800 employees in the industry—a significant number—but Glasgow has 36,300 employees or thereabouts. Nearly 60% of employment in financial and related professional services in Scotland is concentrated in those cities. Edinburgh has an important international financial centre and a strong presence in banking, life insurance and investment management activities, and Glasgow has strengths in insurance, legal services and accountancy, but Aberdeen and Fife employ a large number of people in the industry.

As the Member for Glasgow Central, it would be remiss of me not to talk about Glasgow which, since 2001, has developed its international financial services district. That has rejuvenated an area in the city that had been left behind by old industries, with warehouses and neglected areas near the Broomielaw. It has been redeveloped into a hugely vibrant sector of the city. Many large companies based there employ people in high-value jobs. Those companies were able to get buildings, set up to work and employ people locally.

The IFSD has attracted £1 billion of investment to the area, so it is no small project. It has brought in more than 15,500 new jobs through investment and expansion by working in partnership with the city council, Scottish Development International, Scottish Enterprise and Skills Development Scotland, to name a few.

It worries me greatly that Glasgow, which is recognised in the global financial centres index as the 14th most competitive financial centre in Europe, would lose out as a result of the reckless move towards leaving the EU, the customs union and the single market. It concerns me because when jobs go in London, London may be able to absorb it, but the economies of Edinburgh and Glasgow are more peripheral in the UK set-up. The UK has a London-focused economy. Without any great control in the Scottish Parliament over such things, I am concerned that we will not be able to put the mechanisms in place to protect those industries as we would like to do. We are at the whim of what the UK Government decide to do.

I hope the Minister can tell us more about the White Paper that the Government were due to publish last summer on the approach to Brexit and financial services. As I understand, that has not yet been brought forward. I asked the Library for an update on its report from July on financial services and Brexit, and although it could give me an update, it could not give me much progress, because not much has been made—certainly not anything visible or tangible. That concerns me and the sector greatly because of the uncertainty. We should be in no doubt that the sector has to plan and make decisions. The more uncertainty there is, the greater the risk of losing jobs.

Predictably, the European Banking Authority has decided to move to Paris. There are moves afoot from France to build up its sector and to regain what it feels it has lost to the UK in terms of financial services expertise. There is a risk, and other countries are looking to step into the void that we are leaving. The transition agreement merely extends the deadline to reach a deal to the end of 2020. The financial services industry needs and deserves more certainty so it can plan for that.

Not only will we lose financial institutions and companies, but those companies will not have the automatic access to EU markets that they currently have. That loss of influence is significant for the companies that base themselves here, for the decisions and investments that they make and for the jobs they create.

We will also lose influence in Government and between Governments. We will not be in those decision-making rooms where the regulations are being drawn up. We will not have the early influence that we have through EU institutions. We have set a lot of the rules, but in future, at most, we will be able to take rules, which is a huge difference.

The Minister has acknowledged that in an article, where he wrote:

“We know how important it is to the financial services industry that they have continued market access”.

I am sure he will tell us more about what he intends to do about that. Market access is not the same as being part of a market or a component in that market. Market access is second best. The Tories are delusional if they think we will get a better deal than we have at the moment.

Remaining in the European Economic Area could enable financial passporting to continue. That is crucial, because equivalence is nowhere near as uniform and comprehensive as passporting. It does not cover the full range of services currently sold by UK-based firms into the EU, or the full range of clients. As I understand it, banking services could not be offered under an equivalence regime.

Many are deeply concerned about what would happen if there was policy divergence between us and the EU in future, because that could result in the Commission revoking access to those markets with only 30 days’ notice. If a regulatory change that we disagreed with was agreed by the EU, such as a cap on bankers’ bonuses, that could be enough to trigger that denial of services. Switzerland’s referendum to limit immigration from the EU triggered such a response from the EU.

That is worrying given the Government’s attitude to immigration and how they want to treat immigration from all parts of the world—not just the Windrush generation, but EU nationals. Many constituents who come to my surgeries are in highly skilled jobs and have come here as highly skilled migrants. They have found that, because they made a minor change to their tax returns many years ago, the Government deem them a threat to national security under paragraph 322.5 of the immigration rules. If that is how they treat the highly skilled migrants who come to this country to contribute, work and generate wealth, I have little confidence that they will do anything to improve the situation. That is how people are being treated now. How will they treat EU nationals who have come to work in the finance sector?

Some 9,000 EU nationals work in the financial and business services sector in Scotland. Each of those people brings wealth to this country, pays their taxes, has a family, works here and has settled here. They have no great certainty about their future status, how their employers will employ them and whether they will have the right to work as they do now, which is a huge worry.

Those individuals are making decisions as to whether they want to stay here on the basis of what they hear and see. The mood music around immigration has not been very welcoming. Those narratives are almost certainly causing many of them to give up and leave. The Minister is sighing somewhat at that, but that is the reality—that is what I get at my surgeries.

[The Economic Secretary to the Treasury (John Glen)]

I am not. I am listening very carefully.

[Alison Thewliss]

People are not sure what will happen, and they need to have more certainty before they make their decisions. Just as people in the financial sector are making decisions about where their businesses will go, individual employees are deciding as well.

My husband works as an IT professional in Glasgow and knows many people in the sector. They are highly sought-after, highly skilled and well-paid jobs, but they are tied to financial institutions in the city such as J.P. Morgan and Barclays. If those financial institutions contract, those IT jobs, which are highly skilled, will contract too. We need to think carefully about the full pipeline of people. It is not just about bankers in suits sitting in offices; it is the full ecosystem. Those bankers buy lunch, commute into towns and take public transport.

Glasgow has a long and distinguished history in banking. The Bank of Scotland opened its doors in 1695. The Royal Bank of Scotland has its global headquarters in Edinburgh, the Clydesdale Bank has its European headquarters in Glasgow and there are lots of other banking operations in Scotland. I have mentioned Barclays, but HSBC and others also have a presence within Scotland.

Scotland’s general insurance, life insurance and pensions sectors also have a strong reputation and an enviable history of success, with their origins dating back to the early 1700s, when the increase in international trade led to a requirement for marine insurance, and Scotland continues to be a major centre for that sector.

The hon. Member for Chelmsford mentioned the insurance industry. The Association of British Insurers is deeply concerned about the current uncertainty. It has contracts that run for 10 years and pension contracts that run for more than 30 years, and has pointed out that

“these contracts cannot be transferred safely and quickly to a new EU location. Special arrangements would be needed to transfer the contracts, covering both legal form and regulatory responsibility…If nothing is fixed, insurers will be left in an impossible position and face an unacceptable choice: break their promise to customers or risk breaking the law.”

That is deeply serious and I hope the Government are looking at it. It is a huge concern for the sector, which relies on confidence and its reputation.

Fund management in Scotland encompasses a broad mix of large institutional companies and smaller boutique firms that provide investment services to institutional and personal clients around the world. The quality of investment management expertise in Scotland has led to a robust growth in boutique firms and new business start-ups. We have also become a major European centre for asset servicing.

Looking forward, Scottish Government analysis shows that a hard Brexit threatens to cost our economy £12.7 billion—£2,300 per person—a year by 2030, compared with what would happen if we remained in the EU. The UK Government’s analysis is that reverting to World Trade Organisation rules could reduce growth by 8%; that a free trade agreement with the EU would reduce growth by 5%; and that membership of the European Economic Area would reduce growth by 2%.

The EU is the largest single market for Scotland’s international exports—in 2016, Scottish exports to the EU were worth £12.7 billion. The Fraser of Allander Institute estimates that 134,000 Scottish jobs are supported by EU trade. Last week, a report for Citibase, a service provider to small and medium-sized enterprises, found that 63% of Scotland’s SMEs would like to reverse the Brexit process and remain in the single market. That report also found that just 14% of Scotland’s SMEs trusted the UK Government to get a good deal on Brexit. Steve Jude, the chief executive officer of Citibase, has said:

“The message is clear. Scottish confidence in the Westminster Government to secure a good deal for them is at an all-time low, with most SMEs wanting to press the reset button on the entire process.”

The Government should take on board those concerns, because we do not have to leave the EU. Yes, the EU referendum produced a UK-wide result, but there was no mandate for leaving the customs union and the single market, and we must think very carefully about the potential damage that leaving the EU would do to our economy, which would hurt all of us and all of our constituents.

The hon. Members for Chelmsford and for North East Derbyshire (Lee Rowley) mentioned bank closures, which are of huge concern to our constituents right across the country. That is particularly true for RBS, in which the Government have the leading share. We own RBS and we should be telling it that it is unacceptable to renege on the trust we have put in it—we helped it to get back on its feet—by whipping away services to our communities. We have heard Members from across this House—not just Scottish National party Members but Conservative Members—criticising RBS for saying that it would provide banking services and send its vans around before pulling back on that as well. RBS has reneged not once but twice. RBS has provided a limited service, which are the bank vans it sends around. Those vans do not have disabled access, which has led to people being served in car parks in the wind, rain and all weathers. That is a ridiculous situation and the Government should do more to put pressure on RBS.

The hon. Member for North East Derbyshire mentioned the idea, which has a lot of merit, of a shared service point for bank branches. Banks should come together to see what they can do collaboratively so that their customers are not left with nothing. I know people from other parties have mentioned that idea. It definitely has merit.

Hon. Members have mentioned on the record dirty money, the importance of clamping down on money laundering and the SNP position on the scandal of Scottish limited partnerships being used for money laundering. I hope there will be progress on tackling SLPs and addressing their lack of accountability. We have tabled amendments to the Sanctions and Anti-Money Laundering Bill to that end, but if the Government are not going to take them on board, as I had hoped they would, I hope they will bring something else forward soon so that we can deal with that.

The major issue that prevents a clampdown on money laundering is the Companies House loophole. I have mentioned that to the Economic Secretary to the Treasury before—he has heard my views on it. Just recently, we had the strange case of the businessman Kevin Brewer, who fully admitted what he was trying to do in testing the Companies House loophole. However, he was fined and found guilty of crimes related to money laundering when all he was trying to do was to prove that the system was absolutely defunct and open to all kinds of corruption.

The Government have hailed the prosecution of Kevin Brewer, but all they have done in this case is to shoot the messenger. This man was deliberately trying to do something—he told the people he involved in this activity exactly what he was going to do. There has been a clampdown on this person but there is no clampdown on the many hundreds of people—at least—who abuse the Companies House loophole by paying their £12 to register a company with no checks whatsoever by Companies House as to the veracity of that person.

If someone applies for any other Government service such as a passport or a form to do their tax returns, they have to go through the Government’s Verify system. This situation is allowing people to set up companies with no checks on them whatsoever. It is wide open to money laundering and corruption. The Government need to take heed of that and take action.

The hon. Member for North East Derbyshire said the EU was “playing politics”. I found that comment slightly bizarre, because it is playing politics that has got us into this situation in the first place. A weak Tory Government, pandering to its Back Benchers, led us into the EU referendum and to the calamitous situation we are in. If anyone is playing politics, it is the Conservative party, and we need to get a lot more serious than playing politics because there is so much at stake.

The hon. Gentleman also mentioned innovation within financial services. That is an area where the UK has taken a great lead. I was on holiday in the US recently, over the Easter period. I found it astonishing that US companies do not even have chip and pin, never mind contactless payment, for their financial transactions. In this building and in other buildings in the UK, we are used to being able just to tap our cards to make a payment, so I found it bizarre to be given a slip of paper to sign. US companies find our position unusual, whereby we can just tap something and pay with our phone or a card. There is an interesting contrast between where we are and where they are in terms of technology—there are huge advances coming along in financial technology and other areas.

Hopefully, if we get any kind of Brexit deal right, FinTech will continue to blossom. Staying within the single market and the customs union gives us the best possible chance of using and developing our expertise and making it sellable to the rest of the world through the EU, which of course has a huge customer base.

I will close my remarks by saying that the problems within the financial sector are clear with regard to the EU and Brexit. The sector has made clear the difficulties that are arising, and the impact that those difficulties will have on jobs and on our economy, but we are coming up very close to the date when we will leave the EU, and the solutions are not there. The transition period will give only a little extra time for that process and does not give the reassurance required.

We need solutions from this Government and we need them soon. We need a White Paper and solutions that will make a difference to companies and give them reassurance before they decide that they will just take flight, and take with them so many jobs and so much else that they give to the UK economy.

--- Later in debate ---

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Chelmsford (Vicky Ford) on securing the debate, and my hon. Friend the Member for North East Derbyshire (Lee Rowley) and the hon. Members for Glasgow Central (Alison Thewliss) and for Stalybridge and Hyde (Jonathan Reynolds) on their contributions.

We have had a very well-informed discussion of a wide range of financial services issues. It felt as if every discussion I have had over the last three and a half months as a Minister has been put under scrutiny. I will try to respond to all the points raised. I acknowledge the deep knowledge and experience of my hon. Friend the Member for Chelmsford, in both her work in financial services, infrastructure and project financing and, more recently, her work as a Member of the European Parliament, particularly on the Committee on Economic and Monetary Affairs.

Before I get into the substance of the issues, it would be useful to acknowledge that today’s debate is occurring not in a vacuum, but in the context of a strong and resilient economy. GDP growth has remained solid at 1.8% in 2017, extending the period of continuous growth to five years. That is higher than the 1.5% forecast at the autumn Budget. The UK economy has beaten expectations, and the Treasury and the Government will continue to set ourselves the mission to beat the forecasts. As Economic Secretary to the Treasury, I am committed, along with my Treasury officials, to ensuring that the financial services industry retains its place on the mantel as a beacon of prosperity for this country.

As I continue to tell industry and my colleagues in Government, financial services constitute the plumbing of this country’s economy. We do not want to be reticent about describing and applauding that. Financial services, as others have mentioned, represent 12% of total UK economic output, and the industry contributed £72.1 billion to the Exchequer in 2016-17—11% of total Government tax receipts. It is a critical industry for our nation.

As others have also mentioned, more than 1 million people are employed in the financial and insurance sector in the UK. Some 63% of those jobs are outside London, with 52% outside London and the south-east. That includes 98,000 in the north-west, and 87,000 in Scotland—including, I understand, that of the spouse of the hon. Member for Glasgow Central. Those figures represent the livelihoods of people up and down this country and, as the hon. Lady pointed out, they represent a multitude of jobs beyond the square mile. As I often point out, there is a whole ecosystem of support services and economic activity related to financial services. Bank tellers, mortgage brokers, salespeople, and IT staff form the backbone of this industry in the UK.

The Government’s approach to financial services is based on ensuring that the sector does what it should: effectively channelling savings and capital flows into productive investment to allow the real economy to manage financial risk, take advantage of commercial opportunities, and boost economic prosperity up, down and across the country.

Our historical success has been based on being the most open and dynamic financial hub in the world and having the deftness to continuously innovate and adapt, but there is no room for complacency. We cannot and will not rest on our laurels. The success of financial services has helped elevate the UK to the status of a post-industrial economy. My hon. Friend the Member for Chelmsford made reference to the industrial strategy, which was launched in November 2017 to prepare the whole UK economy for the future. We are taking action across a range of sectors. We published an investment management strategy. I look forward to responding to the recommendations of the green finance taskforce, which reported in March. We are poised to continue to be leaders in innovating in these sectors, to capture the value of innovation, capitalise on all opportunities and speed prosperity to all regions of the United Kingdom.

Close alignment between our financial sector and other parts of the economy is therefore crucial to the success of our industrial strategy. Financial services is a high-growth, high-tech driver of the UK economy and we are working to ensure that, in the face of rapid change, the UK remains the No. 1 place in the world to conduct financial services business. We are fully committed to that mandate, as demonstrated in the announcement of our FinTech sector strategy last month, which is intentionally aligned with and complementary to our industrial strategy.

I want to run through current Government thinking on the regulation of financial services, which is key to how the sector will thrive in a post-Brexit Britain. I also want to reassure hon. Members that the changes required to the financial services regulatory framework following our exit from the EU are an integral part of the Treasury’s exit planning. The Government are listening to the views of industry—the International Regulatory Strategy Group was mentioned—and of course to those across Parliament. I look forward to further work with my Treasury colleagues on financial services regulation as we prepare for our departure from the European Union.

Following the financial crisis 10 years ago, the Government introduced necessary changes to seek to restore public trust in financial services. I recognise that that has been a long and difficult process, but we continue to attract international commendation for the robustness of our regulatory and prudential systems. In the last round of the Financial Sector Assessment Program, the International Monetary Fund found that the UK was fully compliant on the 19 Basel core principles for effective banking supervision. Only France and Switzerland are able to match that. A decade on from the crisis, we should never lose sight of the principal purpose of the regulatory and supervisory regimes: to ensure financial stability and protect taxpayers from having to step in to deal with failure. The key lesson from the financial crisis has been cross-border co-operation, not a global race to the bottom or destabilising protectionism.

That thinking extends to our approach to Brexit. It is crucial that our exit from the EU is smooth and orderly. As my hon. Friend the Member for Chelmsford said, we made a big step forward in agreeing the legal text on an implementation period, which will keep market access on existing terms for firms and consumers. In December, the Government said that, if necessary, we will legislate to ensure that the contractual obligations she mentioned continue to be met, which will benefit millions of UK consumers who have insurance policies from EU firms. It is in the interests of the EU to take similar measures for UK firms serving EU customers, and we continue to encourage co-operation between regulators. We are working on that active dialogue all the time.

It defies logic that a loose relationship with the UK would give the EU the depth of co-operation necessary for a market as close as the UK, and vice versa. That means—I want to be crystal clear—that we do not intend to rip up the rule book after exit. When I hear echoes that there should be a bonfire of financial services regulation post-exit, or a race to the bottom, nothing could be further from the truth.

On 7 March, the Chancellor set out a vision for our future relationship in financial services in what has been called his HSBC speech. The hon. Member for Glasgow Central asked about that vision. It was a thorough analysis of the challenge and the opportunity and the need to prioritise financial stability, and argued for a deal that preserves the mutual benefits of the sector. Neither the UK or EU should be under any illusion about the significant additional costs that would be borne by Europe’s businesses and consumers if this highly efficient market were to fragment. It is a complex ecosystem that serves the UK and the EU. Oliver Wyman calculates that the wholesale banking industry would need to find $30 billion to $50 billion of extra capital if new regulatory barriers forced fragmentation of firms’ balance sheets.

To echo the Chancellor, the major winners from fragmentation would not—despite what President Macron suggests—be Paris or Frankfurt, Dublin or Luxembourg, but New York, Singapore or Hong Kong. That point was made by the hon. Member for Stalybridge and Hyde.

[Jonathan Reynolds]

I agree entirely with the Minister’s analysis but he would surely recognise that the transition period can come into play only if the Northern Irish issue is solved. The only way to solve the Northern Ireland issue is with a customs union, and the only way to solve where the country is on that is to let the House of Commons vote on it. Does the Minister know whether the Trade Bill will come back to the House at any point in the near future to give the it the chance to resolve the issue and get the benefits he is describing?

[John Glen]

The hon. Gentleman has made a valiant attempt to try to draw out from me something over which, as he is probably very aware, I have little control. I do share with him an appreciation of the centrality of financial services in the City of London and we have a shared understanding that, if the EU does not come to a place of understanding about City of London financial services, it would leave Europe a lot less competitive.

To address that, the Chancellor set out what our future regulatory framework should look like, underpinned by three things: a binding dialogue for regulatory requirements, supervisory co-operation arrangements that are reciprocal and reliable, and an independent arbitration mechanism to provide durable dispute resolution. That is clear. It is complex, but necessarily so, given what we are dealing with.

Reaching such an agreement with the EU need not be a challenging objective because the status quo is an unbeatable precedent to work from. Our markets are already deeply interconnected; our rule books are identical; and our mutual commitment to world-leading standards is unbeatable. The EU itself has challenged the notion that financial services cannot be addressed in trade negotiations, as evidenced in its approach to creating a deep bilateral framework with the US in the Transatlantic Trade and Investment Partnership negotiations. In those negotiations, the EU pitched a relationship based on mutual recognition of regulations and a unique dialogue on aligning future rule-making. TTIP is a precedent for the approach that we wish to take with the EU. It is in neither the UK’s nor the EU’s interest to exclude financial services from the future relationship.

The UK is clear that there are limitations to how much either of us can achieve unilaterally. The reality is that the European Council and European Parliament have now formally recognised the need to address the terms of market access in financial services between the UK and the EU, so we need to come to the table and discuss it further.

Myriad financial services on which businesses rely to reduce their costs are derived from or pass through, or are linked to, the UK market. Businesses also reap the benefits of the savings and capital flows to consumers across the continent. Those flows untap greater financial prospects for a broad range of people and allow them to access new products and services, such as innovative investment opportunities, tailored and appropriate debt products, and technology-driven solutions such as open banking.

My hon. Friend the Member for North East Derbyshire talked about shared services in the context of the challenges relating to bank closures. The only inhibitor to that is the banks themselves—there is no restriction on finding a shared venue. I know from my conversations with banks in my constituency that phenomenal changes are going on in the age profile of bank users. Just before the Easter recess, I took the opportunity to visit different banking environments and a mobile banking facility in Derbyshire. I was very impressed with what I saw. It happened to be a Lloyds mobile bank, and it came to the village twice a week at the same time. It had disabled facilities. Of course, we all want to retain that certainty about the bank network, but that is not possible because it is a commercial decision. I am in active dialogue with a range of banks, as we all are as constituency MPs, and I know that these are difficult decisions. I commend my hon. Friend’s suggestion, and I raise it actively when I meet representatives of banks.

[Vicky Ford]

On bank branch closures, I too commend the suggestion about bringing together many banks to operate out of the same premises, although that could be difficult to achieve. People have raised with me the issue of depositing cash. The people who run the church or school fête tend to have large quantities of small denominations of cash. Is there more we can do to ensure that the Post Office offers that service?

[John Glen]

UK Finance and the Post Office have come to a new understanding about how the Post Office’s services are made available if the last bank leaves a town or community. In 99% of cases, the services that an individual non-business customer would wish to use are accessible in post offices. There are some limits—this needs to be checked, but I am pretty sure it is £2,000 in cash—but alternative arrangements can be made if necessary. Although I accept that in some cases there is a cultural barrier to the widespread use of post offices, there is no functional reason why they cannot provide the vast majority—99%—of the services that most consumers and 95% of small businesses want. I urge my hon. Friend to look into those options and make that clear to her constituents.

[Alison Thewliss]

On business customers, does the Minister agree that the closure of bank branches in rural areas means that staff have to cover longer distances, in some cases carrying large sums of cash backwards and forwards? Has he raised with banks the concern that carrying money around in that way can put people at risk?

--- Later in debate ---

[John Glen]

I thank the hon. Lady for that point. I do not believe I have made that point to the head of a bank yet, but it is certainly something I would be happy to take up, particularly given the rurality of some communities.

Let me move back to my script. The industry in the UK has matured and developed in the UK as a creator of wealth for a broad spectrum of people across the world. Firms based in the UK do business with and have exposure to jurisdictions across the globe. We need to ensure that investors and banks from across the world can continue to come together to meet and transact, which means embracing the exciting commercial opportunities that will define international capital markets over the coming decades. The UK already has world-leading positions in the markets of the future, including FinTech, for which we have developed what we call FinTech bridges to other jurisdictions—most recently Australia. We are world leaders in green and sustainable finance, and in rupee and renminbi products, and we are committed to strengthening that position further. That also means expanding our bilateral relationships with key partners around the globe, which includes our economic and financial dialogues with China, India, Brazil, Korea, Hong Kong, Singapore and Japan. There are enormous growth opportunities for the future.

Our new financial regulatory working group with the US, launched last week, cemented the already strong and deep relationship between the UK and US regulators. All of that will increase our financial co-operation with priority overseas markets and further establish the UK as the partner of choice for financial services.

As has been made clear, the significance of financial services to this country’s economy cannot be understated. It has propelled the UK to greater heights and its people to greater prosperity. I thank all hon. Members who have contributed to this very useful discussion, which has highlighted to me what a privilege it is to represent these interests in Government. Beyond Brexit, the Government are committed to creating the right environment so that this industry can continue to thrive.

Contingent Liability Notification

John Glen Excerpts

Thursday 26th April 2018 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

I can today confirm that I have laid a Treasury Minute informing the House of the contingent liability that HM Treasury has taken on in authorising the sale of a portfolio of Bradford & Bingley loans acquired during the financial crisis under the last Labour Government.

On this occasion, due to the sensitivities surrounding the commercial negotiation of this sale, it has not been possible to notify Parliament of the particulars of the liability in advance of the sale announcement.

The contingent liability includes certain remote fundamental market-standard warranties which are capped at 100% of the final sale price. The maximum contingent liability arising from these remote warranties is capped at the total consideration received, giving a maximum contingent liability of £5.3 billion. A separate set of fundamental market-standard warranties is capped at 20% of the final sale price, giving a maximum contingent liability of £1.1 billion. The fundamental warranties are considered to be so remote that they do not meet the definition of a contingent liability requiring disclosure under international financial reporting standards. However, they are disclosed as remote contingent liabilities under principles of parliamentary accountability.

Further market-standard time and valued capped warranties and indemnities confirming regulatory, legislative and contractual compliance have been provided to the purchasers. The maximum contingent liability arising is approximately £0.3 billion.

I will update the House of any further changes to Bradford & Bingley as necessary.

[HCWS649]

Capital Needs of Co-operatives

John Glen Excerpts

Wednesday 25th April 2018 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Sir David—for the first time, I believe. I congratulate the hon. Member for Harrow West (Gareth Thomas) on securing this debate today. I am grateful to him for giving advance notice of the topics that he has brought before the House, which has given me an opportunity to consult my officials. Although I do not anticipate that we will get to final conclusions that will fully satisfy him today, I am very happy to have a meaningful dialogue with him in the Treasury with officials and Mutuo, the think-tank that he mentioned. I acknowledge his long-standing commitment to co-ops as chair of the Co-operative party and chair of the all-party group for mutuals. I take what he has said very seriously.

We have heard today how much the mutuals sector is valued in this country, and we share that enthusiasm in Government. I am aware that the hon. Gentleman, alongside other voices in the sector, proposes the introduction of a new financial instrument that co-operatives could use to raise capital. I also recognise that co-operatives need to be able to raise capital quickly and efficiently, and I appreciate the need for flexibility in capital planning.

The hon. Gentleman knows, as a distinguished former Minister himself, that any new policy needs to be thought through and to receive due consultation, not as a wilful delay but to ensure that it is right. I will ask my officials to explore the proposal further, including through discussion with representatives of the sector. I will gratefully receive any further information that he can provide me with.

The hon. Member for Strangford (Jim Shannon) raised the issue of allowing co-operatives to invest in social housing, and I thank him for that suggestion. Again, I do not have an answer now, but I will be happy to discuss that with officials and to liaise with him over the outcome. The hon. Member for Leeds North West (Alex Sobel) asked about the £100,000 cap on share capital and its potentially being lifted. In 2014 the cap was lifted from £20,000 to £100,000. We will keep that under review, but I acknowledge what he said and we will continue to examine that.

I turn to the mutuals’ deferred shares, which the hon. Member for Harrow West mentioned. The Government recognise the benefits of mutual insurers to consumers and the economy. That is why they supported the passage of the Mutuals’ Deferred Shares Bill, which was originally introduced as a private Member’s Bill in 2015. The Treasury consulted on the technical details of MDS in late 2016. We received representations from a variety of mutual insurers, consultants, and industry groups. It emerged from the consultation and follow-on work that the industry sought to issue MDS that, first, qualified as top-tier capital under relevant prudential regulation, and, secondly, had no ill effect on the tailored taxation regime that applies to mutual insurers. Since the consultation, my officials have been working closely with HMRC and the regulators to investigate whether it is possible to structure MDS to satisfy both requirements. Throughout that process, officials have sought the views of industry and its representatives via correspondence and roundtable meetings.

It has become clear that, if a mutual insurer issues equity that qualifies as top-tier capital, it will breach at least one of the principles of mutuality, found in case law, affecting mutual insurers’ tax treatment. Amending primary legislation to ensure that that did not occur would not be straightforward, and could have many unintended and undesirable consequences. For instance, any proposed exemption could give rise to legal risks in the form of state aid. I am happy to get into the detail of that in conversation with the hon. Member for Harrow West. I am considering the available options, but clearly there is no simple solution. I was drawn to ask officials why this matter did not become apparent during the passage of the Bill. Probably it was because the Bill was passed quickly in the early part of 2015, and the issue did not arise.

I now want to exhaustively examine the issues raised. The hon. Gentleman suggested that the Marcora law would assist worker buy-out of failing firms. I thank him for making me aware of that policy, which sounds worthy of further consideration. Job losses caused by firm failure can have a devastating impact on communities, particularly when those employers account for a high concentration and number of employees in a single community. I would be interested in learning more from the Italian example about how converting to a co-operative structure can avoid job losses while saving taxpayers money.

I would also be keen to see evidence on the implications for productivity. Clearly, a short-term fix that does not address some of the fundamental challenges that exist in a business is something that one would wish to examine. Again, I will ask my officials—they will be very busy—to discuss that with representatives of the co-operative sector in order to understand whether that model could be used in the UK, if not in that precise form then in one derived from the concept.

We must not forget that the Government have shown a demonstrable commitment to supporting the sector, because we are acutely aware of its significance. There are nearly 7,000 co-operatives in Britain today that, together, contribute more than £36 billion to the UK economy. Recognising the value of co-operatives, in February we introduced a measure to bring audit requirements for small properties in line with those for small companies. Properties have a key role to play in social investment. Last year, the Government expanded the social investment tax relief scheme, which provides a tax break to encourage investment in social enterprises for certain co-operative investors. That expansion will allow social enterprises to receive investment of up to £1.5 million under the tax relief, which is a substantial increase from the previous limit.

The Government see the great value in the mutual sector and the contribution it makes to not only our economy, but our communities. That is why we have taken steps to support all mutual structures, from co-operatives to credit unions. Today’s discussion has been fruitful, and I will look to have further such conversations. I thank the hon. Member for Harrow West for his long-standing commitment to co-operatives, and the constructive way in which he has brought this matter to my attention. As a Minister, I am very conscious that one’s time in office can be very short. If there is anything I can do to move this agenda forward, I give him my commitment that I will do so.

Question put and agreed to.

Financial Guidance and Claims Bill [Lords]

John Glen Excerpts

3rd reading: House of Commons & Report: 3rd sitting: House of Commons
Tuesday 24th April 2018 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

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,

(ii) carers,

(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.

[John Glen]

It is a great pleasure finally—for the third time of asking, I believe—to have the opportunity to start the Bill’s Report stage. I want to make a positive start to proceedings by covering new clauses 4 and 9, which will allow us to protect consumers from harmful cold calls by enabling us to lay before the House regulations to ban pensions cold calling and introduce bans for other forms of cold calling, if we consider it appropriate to do so.

As I have said previously, I want to ban pensions cold calling as soon as possible, given the profoundly damaging impact that pension scams can have on people’s lives. I have listened to the recommendations of the Work and Pensions Committee, which published a report before the turn of the year on preventing pension scams, as well as to the passionate calls that have been made across the House and in the other place to ban pensions cold calling. I am pleased to present new clause 9, which builds on and improves the clause proposed by the Committee. The Government’s new clause has a wide scope, which means that we can ban all pensions-related calls. Crucially, we do not need to wait for advice from the guidance body before we implement a ban, so we can make good on our commitment to ban pensions cold calling quickly. I hope that the fact that I will have to lay a statement before both Houses if we have not laid regulations before Parliament by June will reassure hon. Members on that point.

I turn to new clause 4. It is clear to me that, too often, significant consumer detriment arises because of cold calling. If we find evidence that people are experiencing detriment as a result of cold calling regarding consumer financial products, we will not hesitate to use this power to protect consumers.

I am pleased to be able to confirm the final part of our approach to protect consumers from cold calling by means of amendment 10. The amendment expands and improves on the consumer protection function. It gives the body powers to publish regular assessments of consumer detriment resulting from cold calling, and to advise the Secretary of State on where further bans should be implemented. The change clarifies the consumer protection function and gives the body a clear mandate to support the Government in preventing harm that results from cold calling. In fact, the Bill has been agenda-setting in relation to cold calling. The amendments that we are discussing will give the Government new powers to ban cold calling in some of the areas that are the most pressing when it comes to protecting consumers.

[Neil Gray (Airdrie and Shotts) (SNP)]

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?

[John Glen]

I have tried to make it clear that when we are setting up a new body, it is important that we take time to reflect on the evidence and that we take action in consultation with and alongside that body. I acknowledge the widespread concern that exists in other areas, and I think that the action we are taking gets the balance right when it comes to getting the evidence together and moving as quickly as possible when the case has been made.

The amendments that I have outlined are additional to the amendment that was made in Committee to introduce a ban on claims management cold calling, which will cover calls about claims on matters ranging from mis-sold payment protection insurance to holiday sickness and car accidents. That means that calls about PPI, whether we have been in a car accident or whether we were sick on holiday—we are all familiar with such calls—will be banned unless prior consent has been given to receiving them.

Having ensured that we can tackle cold calling effectively, we plan to remove the existing clause 4 by means of amendment 11. Amendments 12, 25, 26, 28, 29, 45 and 46 are minor and consequential to these changes. In particular, amendment 45 commences new clause 9 on Royal Assent to ensure that there is no unnecessary delay in making regulations, and amendments 44, 47 and 48 prepare the Bill for the new data protection legislation.

[Jack Dromey (Birmingham, Erdington) (Lab)]

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.

--- Later in debate ---

[Ellie Reeves]

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.

[John Glen]

I am acutely conscious of the need not only to get on to the second group of amendments but to respond to the amendments in the first group. I will do my best to address all of them, and I will give myself five minutes to do so.

I will start with new clause 7 and amendment 34, tabled by the hon. Member for Eastbourne (Stephen Lloyd). The body is already expected to develop a national strategy to improve people’s financial capability, including ensuring that consumers improve their financial resilience, so the Government believe that the amendments are not necessary.

--- Later in debate ---

[Jack Dromey]

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.

[John Glen]

I am grateful to the hon. Gentleman and I acknowledge his kind words, which are reciprocated from our Front Bench. We continue to have a meaningful dialogue on the outstanding concerns that exist between us.

[Frank Field]

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?

[John Glen]

I thank the right hon. Gentleman for his remarks. I always listen very carefully to what he says. We have made provision for additional bans to take place very quickly, and if my optimism is misplaced, I would expect the body to act. I will continue to have a deep dialogue with the right hon. Gentleman on these matters.

Question put and agreed to.

New clause 4 accordingly read a Second time, and added to the Bill.

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.’—(Guy Opperman.)

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.

Brought up, read the First and Second time, and added to the Bill.

Clause 2

Objectives

Amendment proposed: 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,

(ii) carers,

(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,”.—(Neil Gray.)

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.

Question put, That the amendment be made.

--- Later in debate ---

[Luciana Berger]

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.

[John Glen]

In the interests of time and to allow others to speak, I just wanted to confirm that the Government recognise the motives and the wide degree of support behind the proposals and the particular issues for people experiencing a mental health crisis. We will commit to ensuring that people receiving NHS treatment for a mental health crisis, either at a psychiatric in-patient setting or in the community, will be provided with an alternative mechanism to access the breathing space scheme. We will see that that is developed concurrently with the main breathing space scheme.

[Luciana Berger]

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.

[John Glen]

Being mindful of the need to allow others to speak, I rise to discuss Government amendments 13 to 24. Clauses 19 and 20, which were added by the Government in Committee, aim to build on the Work and Pensions Committee’s proposals by putting them into a workable legal framework, ensuring mirroring provisions for UK occupational pension schemes. Discussions with stakeholders and Members of both Houses have informed amendments 13 to 24. If amended, clauses 19 and 20 would place new duties on managers and trustees of all defined contribution pension schemes when an individual seeks to access or transfer their pension pot.

[Frank Field]

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?

[John Glen]

The spirit that has run through the House during the passage of the Bill necessitates continued dialogue, and I can certainly give the right hon. Gentleman that undertaking.

I make it clear that when an individual seeks to access or transfer their pension pot, the duties will ensure that they are referred to Pension Wise guidance and that they receive an explanation of the nature and purpose of that guidance. Before proceeding with an application, subject to any exceptions, schemes must ensure that individuals have either received Pension Wise guidance or have opted out. Rules and regulations can specify how and to whom an individual must confirm that they are opting out, which allows for the opt-out process to be separated from schemes. Rules and regulations will set out the detail of the opt-out process, based on evidence of what helps people take up Pension Wise guidance.

These Government amendments lay the foundation for an effective final nudge towards guidance and will allow us to test what works best before implementation and to update the approach in future. They strike the right balance with what is set out in primary legislation, with rules and regulations providing suitable flexibility.

In the interests of time, and to be fair to everyone else, I will now sit down.

[Norman Lamb (North Norfolk) (LD)]

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.

Bilateral Loan: Ireland

John Glen Excerpts

Tuesday 24th April 2018 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

Her Majesty’s Treasury has today provided a further report to Parliament in relation to the bilateral loan to Ireland as required under the Loans to Ireland Act 2010. The report relates to the period from 1 October 2017 to 31 March 2018.

A written ministerial statement on the previous statutory report regarding the loan to Ireland was issued to Parliament on 7 November 2017, Official Report, column 45WS.

[HCWS641]

Oral Answers to Questions

John Glen Excerpts

Tuesday 17th April 2018 Commons Chamber

[John Mann (Bassetlaw) (Lab)]

13. What comparative assessment he has made of the size of the national debt (a) today and (b) 12 months ago.

[The Economic Secretary to the Treasury (John Glen)]

Public sector net debt as a percentage of GDP was 85.1% at the end of February 2018, which was 0.9 percentage points higher than last February. The latest forecast shows that debt will fall this year, two years before the fiscal rules require.

[John Mann]

The national debt is going up by £5,000 a second. Can I be helpful? Will the Minister join me in stopping hospitals that are outsourcing staffing to avoid VAT, with an estimated 6% savings on wages lost to the Treasury, from doing so?

[John Glen]

The important point is that the debt is going down this year. We want to avoid a situation like that in the last three years of the last Labour Government, when public sector net debt doubled.

[Mr Speaker]

The hon. Member for Mid Dorset and North Poole (Michael Tomlinson) can very easily shoehorn in his own inquiry on this question. Question 14 is not dissimilar to 13—have a go on 13, man.

--- Later in debate ---

[Michael Tomlinson]

14. That is very kind of you, Mr Speaker. Is it not vital that we reduce our national debt, stop wasting taxpayers’ money on debt interest repayment, and spend it on our public services instead?

[John Glen]

I concur absolutely with my hon. Friend. He might like to know that between 2010 and 2017, we spent £300 billion on debt interest, which is twice the current annual budget of the NHS.

[Philip Davies (Shipley) (Con)]

rose—

--- Later in debate ---

[Philip Davies]

Given all the talk of austerity, will the Minister tell us what Government spending was in cash terms in 2010 and what it is in this financial year?

[John Glen]

I can assure my hon. Friend that the Government have taken a balanced approach to the public finances, reducing the deficit by three quarters. We have also made tough decisions to invest as well as to spend on public services, which is what the public expect of us.

[Jessica Morden (Newport East) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

--- Later in debate ---

[Paul Blomfield (Sheffield Central) (Lab)]

T6. The number of people with unmanageable payday loan debt has more than halved since the Financial Conduct Authority introduced a total cost cap more than three years ago following pressure from Members on both sides of the House. New analysis by Citizens Advice suggests that extending the cap to doorstep-loan and rent-to-own markets would have the same impact on problem debt in those sectors, and could save consumers up to £154 million a year. Will the Chancellor consider taking such action?

[The Economic Secretary to the Treasury (John Glen)]

The hon. Gentleman has made a very sensible point. The FCA is looking into that proposal and will publish another report in May. I met Andrew Bailey just a few weeks ago to underscore the importance of the issue, and as we proceed with the construction of the single financial guidance body that will deal with some of the challenges of problem debt, I know that this will be another focus of its work.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Automation, machine learning and artificial intelligence have the potential to offer huge productivity gains. What discussions has my right hon. Friend had with colleagues across Government about providing leadership in this important field so that we can reap the maximum productivity boost and be at the forefront of this exciting technology?

--- Later in debate ---

[Mr Marcus Jones (Nuneaton) (Con)]

We have heard encouraging news today about wages, but what more can Ministers do to help my constituents with the cost of living?

[John Glen]

There are a number of challenges that need to be overcome for the poorest. We have increased the national living wage by 4.4%—to £7.83 an hour—and also the allowance that applies before people pay tax. We have made other changes, such as freezing fuel duty, to ensure we are doing all that we can for the hardest-working people in our communities.

[Mr Speaker]

Order. I exhort the Minister to face the House; I understand the temptation to look backwards, but one should always look at the House.

--- Later in debate ---

[Stephen Lloyd]

Thank you, Mr Speaker. An elderly couple in my constituency, Mr and Mrs Fitzgerald, are about to lose their home. They have an interest-only mortgage with Santander, which does not allow mortgages for people over 75, although the Nationwide allows them for people up to 85. Will the Minister help me to persuade Santander so that Mr and Mrs Fitzgerald do not lose their home in the coming weeks?

[John Glen]

Clearly, the lending decisions of individual banks are a matter for them, but I would be happy to meet the hon. Gentleman to consider the case and see what has happened.

Reinsurance (Acts of Terrorism) Act 1993

John Glen Excerpts

Thursday 22nd March 2018 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

I am today announcing that the Government intend to legislate as soon as parliamentary time allows to amend the Reinsurance (Acts of Terrorism) Act 1993. This amendment will enable an extension of the cover provided by the Government-backed terrorism reinsurer Pool Re to include business interruption losses that are not contingent on damage to commercial property. I will announce further details in due course.

This Government remain committed to ensuring that businesses can continue to secure insurance against the financial costs of terror attacks.

[HCWS579]

Banking in North Ayrshire

John Glen Excerpts

Wednesday 14th March 2018 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

I sincerely commend the hon. Member for North Ayrshire and Arran (Patricia Gibson) for securing this debate. She has once again spoken very powerfully on behalf of her constituents, and I know that she is passionate about this issue. The RBS executives will note that there are more than 20 Members of Parliament here and that a number have spoken. They will also want to reflect on the views that have been expressed.

Since becoming Economic Secretary on 9 January, I have had the privilege of responding to a number of debates on the closures of bank branches across the UK and in specific local areas. In each, I have heard important stories about what the local bank branch can mean to the community, as I have heard again this evening. It means a great deal in terms of practical access to services. I will return to that point in more detail. Banks can also be at the heart of how people feel about their local high street and the future of their community. Putting my Treasury responsibilities aside, I visited a bank in my constituency that is facing closure in exactly the same way that the hon. Lady set out. I had to sit down with the bank manager and go through the same sorts of arguments, but these are commercial decisions. I will say a little bit more about that.

[Brendan O’Hara (Argyll and Bute) (SNP)]

Will the Minister give way?

[Neil Gray]

Will the Minister give way?

[John Glen]

No, I am not going to give way because I have only eight and a half minutes, and I want to do justice to all the points that have been raised.

This Government are very aware of the issues. I will talk about the challenges facing the banking sector and our communities. I think that the hon. Lady has said in a previous debate that she does not bank online, and that is her choice, but whatever our personal preferences, banking is going through a period of unprecedented technological change and consumer behaviour is changing significantly. Banks are having to adapt to those shifting patterns of behaviour. The decisions that they are making are sometimes not popular and I understand why, but the hon. Lady will be well aware that those decisions are not for the Government.

The hon. Lady made a point about the former Chancellor, the former Member for Tatton, signing off on the chief executive post. There is a big difference between signing off on strategic leadership and getting involved in day-to-day commercial decisions.

[Brendan O’Hara]

Will the Minister give way?

[Neil Gray]

Will the Minister give way?

[John Glen]

I am not going to give way; I am just going to continue.

Each bank’s branch strategy, including whether to open or close individual branches, is for the management of that bank to determine. I understand that that is frustrating. It is frustrating to all of us who face this issue. The Government rightly do not intervene in these commercial decisions, nor do the Government manage the RBS Group. RBS is headed by its own board, which is responsible for strategic direction and management decisions. All businesses strive to deliver for their customers, but they also need to be able to plan for the future and to make changes where they are needed. These are complex commercial decisions. RBS has made its decisions in line with its commercial strategy.

[Stephen Gethins]

Will the Minister give way?

[John Glen]

No, I will not.

The hon. Lady and her colleagues are entitled to ask questions, as they have done very effectively this evening, and to press RBS on its rationale. Although I do not agree that the Government should or could cancel RBS’s decisions, I am certain that the hon. Lady’s views, expressed here again this evening on behalf of her constituents, will have been heard by RBS.

I turn to the Government’s role with respect to the Post Office. The hon. Lady has previously said that the Government have “not lifted a finger” to help. I beg to differ. The Government are taking action, and I welcome the opportunity to reiterate that. For those who still need or want to bank in person, we have helped to expand and improve face-to-face banking services at the Post Office. There are 11,600 post office branches in the UK, 24 of them in the hon. Lady’s constituency. There is a post office in each of the three towns that she mentioned—Kilwinning, Kilbirnie, and Saltcoats. Indeed, across the UK, 99% of personal customers and 95% of business customers can do their day-to-day banking at the post office.

In response to the hon. and learned Member for Edinburgh South West (Joanna Cherry), who was concerned about—

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

rose—

[John Glen]

I am going to response to the points raised. I have five minutes.

On the concern about small businesses and cash lodgements, RBS offers cash courier services, while the post office can accept up to £2,000 without prior notice, and further arrangements can be made on a case-by-case basis. As the hon. Member for North Ayrshire and Arran has mentioned previously, this might not be a service that people are yet fully familiar with, but I believe that it offers a valuable alternative and that people are adjusting to the reality of what can be obtained from a post office. It is important that the people who can benefit from these services know about them, so I will keep pushing the banks and the Post Office to do more to raise awareness of the expanded services that they jointly offer. It is important that they make this case proactively and publicly. We should spread the message far and wide. We can all do our day-to-day banking at the post office. We in this House can help to reassure people who may be worried about this issue.

On the oversight of banks, where they do decide to close branches, the Government’s ongoing support for the industry’s access to banking standard is making a real difference. All the major high street banks have signed up to the standard, which commits banks to a number of outcomes when a branch closes: first, that they will give at least three months’ notice—I think that RBS, certainly in some cases, has given six months’ notice—secondly, that they will consider what services can still be provided locally and communicate clearly with customers about alternative ways to bank; and thirdly, that they will ensure that there is support available for customers who need extra help to bank online or to access services at the local post office.

The standard is not just a list of outcomes—it has teeth, because the Lending Standards Board monitors and enforces it. It is actively monitoring how RBS Group and other banks fulfil their obligations to their customers when branches close. It has a range of tools and sanctions at its disposal should a bank fall short. I know that it is very open to talking to Members on behalf of their communities, and I encourage the hon. Lady—

[David Linden (Glasgow East) (SNP)]

Will the Minister give way?

[John Glen]

No.

I encourage the hon. Lady—and her colleagues—to talk to the board if she has concerns about the steps that RBS is taking, or not taking, in her constituency. The access to banking standard is the practical way to shape a bank’s approach to local areas. I encourage all Members in all parts of the House to ensure that their community is aware and able to engage with the bank directly.

Several Members have mentioned access to cash. The Government continue to work with industry to ensure the provision of widespread free access to cash. In December, LINK, the organisation that runs the ATM network in the UK, committed to protecting all free-to-use ATMs that are 1 km or more away from the next or nearest free-to-use ATM. This is a welcome strengthening of its financial inclusion programme, and one that I hope will reassure members across the House.

The hon. Lady fights hard for her constituents in North Ayrshire, as do a number of other Members who have spoken, and I am sure that their concerns have been heard. We all understand the frustration and disappointment caused by bank closures, but these are not Government decisions. The Government’s policy remains clear: RBS is responsible for these decisions, and RBS must defend them.

[Neil Gray]

Will the Minister give way on that point?

[John Glen]

No.

Banking is changing rapidly—we cannot deny that reality—but the Government believe that banks must support communities across the UK when their local branches close. That is a dialogue that we are all deeply engaged with in trying to find the best solution for communities. In this place, we can help to draw attention to these issues and work constructively to help our constituents to access the services they need. For my part, I will keep pushing for everyone to be able to access the banking services they need, wherever they live.

Question put and agreed to.

Financial Services

John Glen Excerpts

Tuesday 6th March 2018 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

Following the Financial Conduct Authority’s (FCA) announcement that it has now concluded its enforcement investigations into the Co-op Bank and related individuals, I have today laid a direction before Parliament requiring the Prudential Regulation Authority (PRA) to carry out an independent review into the prudential supervision of the Co-operative Bank between 2008 and 2013, using powers under section 77 of the Financial Services Act 2012.

In November 2013, the then Chancellor of the Exchequer announced the Government’s intention to direct the regulators to launch an investigation into the events at the Co-operative Bank, following its withdrawal from the bidding process to purchase 632 bank branches from Lloyds Banking Group — known as Project Verde. It was stated at the time that this review would not take place until the conclusion of all regulatory enforcement action relating to the Co-operative Bank. Today’s announcement by the FCA means that this has now happened.

The review will look at the actions, policies and approach of the Financial Services Authority, and latterly the PRA, as the institutions with statutory responsibility for the prudential supervision of the Co-op Bank during the period in question. It will focus on the outstanding questions identified by the House of Commons Treasury Committee in its 2014 report ‘Project Verde’ (HC 728-I). As recommended by the Committee, the review will have access to all relevant documents and correspondence, including the record of Government contacts concerning the Lloyds “Verde” bidding process.

I have approved the PRA’s appointment of Mr Mark Zelmer to carry out the independent review on its behalf. The review is expected to run for 12 months, after which HM Treasury will publish a report of the review’s findings. A copy of this report will be laid before Parliament.

The Government are committed to creating a stronger and safer banking system. A vital part of this is ensuring that our regulatory system can learn from past events. The launch of this independent review is a further demonstration of this commitment.

[HCWS512]