Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I very much welcome this debate. It has been very good, albeit short, and has covered a number of important issues. It is really timely to reflect on where we have come to since the passing of the Financial Guidance and Claims Act. My memory has constantly been nudged while listing to noble Lords about many of the things we debated, often at length, particularly regarding education. I will do my best to respond to the questions that have been raised.
I will address some of the specific points in due course, but I start by thanking the noble Lord, Lord Stevenson, for moving this Motion. I will take this opportunity to provide your Lordships’ House with an overview of the newly named Money and Pensions Service, what it has done and what it plans to do.
As noble Lords will know, the Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019 were laid before this House on 4 March. These regulations came into force on 6 April and renamed the single financial guidance body, provided for in the Financial Guidance and Claims Act 2018, as the Money and Pensions Service. These regulations also made amendments to existing legislation, so that references to the Money Advice Service or the Pensions Advisory Service were either removed or replaced with the Money and Pensions Service.
The launch of the Money and Pensions Service’s new name and brand on 8 April is a very positive development that has been welcomed by experts in this field and by industry. The Department for Work and Pensions is especially pleased that the new name for the single financial guidance body has now been set in legislation. This will ensure that both the body itself and its customers are protected by the criminal power in the Act, which makes it an offence to impersonate the body. That was our key purpose in keeping the name back until after the Act was introduced. We now have safely in place this powerful deterrent to protect customers against fraudulent activity. The new name—the Money and Pensions Service—has been well received. It has been positively noted that references to “advice” and “advisory” no longer feature in the name, which was a particular concern raised by noble Lords during the passage of the Act.
I am pleased to say that work has continued apace since the body was established as a legal entity in early October 2018 on the appointment of the chair, Sir Hector Sants, the chief executive, John Govett, and their executive and non-executive teams. On 1 January, the body began delivery to the public of pensions guidance, money guidance and debt advice. It also took on its consumer protection function, and has since laid out its plans for the development of a national strategy to improve financial capability, an important issue that all noble Lords have touched on this evening.
We were clear during the passage of the Act that we wanted to deliver a seamless transition from the Money Advice Service, the Pensions Advisory Service and Pension Wise to a single organisation, the Money and Pensions Service—which we should call MAPS, as the noble Lord, Lord Stevenson, suggested. I am pleased to confirm that we successfully achieved this with no detriment to the customer. It is, however, important to remember that the new service is going through a period of transition. It is essential that we do not underestimate the scale of transformation it is undertaking. The service needs time to focus its energy and resources on a successful transition, while at the same time building towards its long-term strategy. This was well put by its chief executive, John Govett, who set out that his priority for the year ahead is to, “bring the three” previous,
“organisations into one, and re-focus their efforts to increase the number of people supported by the Money and Pensions Service each year”.
This is a laudable and important goal, but it will take time to get right. I noted particularly that the noble Lord, Lord McKenzie, like myself, is always impatient, and rightly so. However, we need to ensure that there are no unintended consequences of moving too quickly. Exceeding expectations and then finding that the body has forgotten to put things into play to support people and protect their finances would be a mistake.
The service will work closely with the Government throughout, particularly the Department for Work and Pensions and Her Majesty’s Treasury. I say to my noble friend Lady Neville-Rolfe that, yes, I am pleased to report that we are working closely and well with our colleagues at Her Majesty’s Treasury. Part of getting it right is ensuring that the new service is responding in the right way to customers’ needs. That is why, at the Money and Pensions Service’s launch last month, it declared that its mission is to put the customer at the heart of everything it does. Its vision, as spelled out in its first business plan, is to ensure that everyone is,
“making the most of their money and pensions",
and that it is improving financial well being throughout people’s lifetimes and equipping, empowering and enabling individuals to make informed financial decisions with confidence.
I am pleased to inform noble Lords that as part of its transition to full service, MAPS has also announced that it will be undertaking a UK-wide programme of listening events. This is really important. During these events, the service will engage with a wide variety of individuals and organisations, including customers, levy payers, providers, consumer organisations, funders and commissioners and other stakeholders, who will help to frame the future strategy of the service. The insight from the listening phase will help to shape MAPS and its three-year corporate plan, which is due to be published in the autumn.
As well as these listening events, MAPS is starting to deliver on the commitment, set out in the Financial Guidance and Claims Act 2018, to gather evidence and develop trials for how to most effectively and more strongly nudge people to take pensions guidance prior to accessing their pension pot—something we debated at length during the passage of the Bill. This builds on the success of the Pension Wise service, which was set up in 2015 to help people understand the pension options available to them. In its first year, 61,000 Pension Wise guidance sessions were delivered. Last year, this had increased to 167,000 and this year MAPS aims to increase that number to 205,000. Building on this tremendous track record, we expect the new service to nudge people towards guidance earlier and to reach them before they start the pension access decision-making journey. This will ensure that consumers have what they need to make a more informed decision, including about taxes and benefits, and to avoid scams—an important issue that was raised by the noble Baroness, Lady Janke. To this end, we are working with MAPS to test with care what is practically feasible. I thank my noble friend Lady Neville-Rolfe for her suggestion of taking a longer look at websites and so on to ensure that we are giving the right advice in a simple form, because a lot of this is about prevention as well as support.
The Government are also swiftly implementing their manifesto commitment to deliver a breathing space scheme. Her Majesty’s Treasury is drawing on the expertise of MAPS in the design of such a scheme—something crucially important and close to the hearts of myself and the noble Lord, Lord Stevenson—including seeking formal advice on specific areas, as required in the Act. The Government will continue to work closely alongside the body as the scheme is delivered. This close work between MAPS and the Treasury will both support the implementation of the scheme and, when it is introduced, enable MAPS to help people in problem debt in the most effective way possible.
Since the passage of the Financial Guidance and Claims Act 2018, the Government have published a policy proposal on all aspects of the breathing space scheme for consultation, proposing strong protections for debtors. The consultation closed in January and a government response to it, to be published shortly, will confirm the details of the scheme. As I have already mentioned, primary responsibility for this policy rests with the Treasury, which will be publishing the response shortly. As I have already said, we are working closely with it.
I am pleased to say that MAPS will be establishing an industry delivery group, bringing together the pensions industry, consumer organisations and others to implement pensions dashboards, including a non-commercial version. This has not been touched on this evening, but the Government will be introducing legislation in this area when parliamentary time allows.
I will now endeavour to address the outstanding points raised during the debate. Regarding the name, yes, as the noble Lord, Lord Stevenson, suggests, we are in a sense talking about two separate issues—how people operate and manage their money, and how they save. Time frames are different for managing debt and for saving for pensions, but we trust in MAPS to manage these realities.
Key to this debate has been the issue of problem debt. The Government have taken steps to support people who have fallen into problem debt, including providing access to high-quality, free-to-use debt advice. Public funding for debt advice in England has risen to £55.8 million in 2019-20, which will provide help with debts to over 560,000 people in 2019-20—an increase of 85,000 compared to 2018-19. MAPS is an important addition to this. I note the concern expressed by the noble Lord, Lord Stevenson, that those in problem debt include increasing numbers of young people and women. Yes, housing is an issue but that is a government priority across all departments, and we are very focused on all aspects of housing and its funding. It is very important to us.
Baroness Buscombe
I thank my noble friend for her point, which is so well made. One reason I am so pleased to have this debate is that it helps, in a sense, to put more pressure on those taking this forward to look a little harder and further at what more we can do to develop financial capability. Yes, as raised by the noble Baroness, Lady Janke, there is always an issue with regard to squeezing this into the curriculum but of course this makes absolute sense, as many noble Lords said during the passage of the Bill. Many thanks to my noble friend for pushing that point a little further. We need to ensure that we can start the process of education by informing people, when they are as young as possible, about planning for their future; that is, in terms of pensions but also in managing their money. Great work is done by charities, but I am sure it will also be done by MAPS.
The most reverend Primate the Archbishop of York made an important point about exploitative lenders. While this is a matter for the Treasury, I can say that MAPS has ambitious plans to help people make informed decisions about their money—an app has been suggested. We are looking for ways to include this in the issues to do with Breathing Space. As I said, the Government will take forward plans on this in due course.
I am very aware of the time but I will say quickly that MAPS is due to publish the national strategy in the autumn, alongside its corporate plan. I also want to say something quickly on pension scams, which have devastating consequences such as the loss of an entire pension fund. That can leave victims without the means to fund their retirement. The Government are committed to implementing a ban on pensions cold-calling and created the powers to do this through the FGC Act. I am delighted to say that the ban came into effect in January 2019, making it more difficult for scammers to initiate pension fraud. Although the ban will have a significant impact on tackling scams, the Government do not consider it as a job done and we will continue our efforts to understand, and take action to prevent, pension fraud.
I think I have covered almost everything. There may be one or two other points that I have not included but I thank noble Lords for their contributions to this debate. It has been important and I feel proud to stand here to talk about the progress being made. I thank again the noble Lord, Lord Stevenson, for giving me that opportunity. We are in a good place with setting up the right bodies and organisations to tackle some of these really important issues, which are close to all our hearts. I would like an opportunity in the not-too-distant future to tell noble Lords more.
The Archbishop of York
I know that the Minister will not want to go into areas covered by other departments, but will she at least commit to take seriously the question of the curriculum? Governments of all parties in the past have done many good things—a noble Lord formerly in education was here at one point. It is important that this should be part of the curriculum and not purely a vague idea of education, because that can go nowhere. Is the Minister giving a commitment that she will talk to those in education who would like to look afresh at the curriculum and that this, like many other important things, could be included in it?
Lord McKenzie of Luton
The issue seems not so much to be what is covered by the national curriculum as the extent to which schools have to comply with it. That is the challenge. As I understand it, free schools and others do not have to. That is the stumbling block that we hit last time. We need to unlock that.
Baroness Buscombe
I thank the most reverend Primate the Archbishop of York and the noble Lord, Lord McKenzie, for giving me a further springboard to have discussions on this with my ministerial colleagues in the Department for Education. It is something that we worked on during the passage of the Bill. We did not get as far as we would have liked. We will try again, but we will also keep talking to the Treasury about this and hope to make progress.
Lord Stevenson of Balmacara
My Lords, I thank all those who have contributed to this short debate. It has served its purpose and achieved what we wanted, which was a chance to reflect on the progress made since the passing of the Bill and an update on the heartening and encouraging work now going on—the listening posts, the three-year plan and the idea that out of this will come a national strategy. I cannot remember whether in the Bill we required that to be brought back to Parliament, but I am sure that an inventive Minister like the one who has just responded would be able to find a way of allowing us to have another discussion on that strategy when it is produced so that we might at least have some sense of engagement with it.
One question arises from that which does not need to be responded to today. On the programme of events that will accompany the emergence of MAPS as a fully fledged body, the breathing space can be achieved by regulation, but the statutory debt management plans require legislation, as might some of the work on pensions. I do not see many notifications of that in the forward programme, but that itself is also quite difficult to discern. When the Minister has some information, perhaps she might share it with us when we are developing that set of legislative processes, because it would give us opportunities to come back to some of the issues we have not touched on. There is an outstanding Goods Mortgages Bill which would be fantastically important in eliminating one more of the high-cost credit problems that we have; namely, that car book loans, established under Victorian legislation of 1858 and 1862, still exist and fall completely outside the current system under which the Financial Ombudsman and others can operate. They predate that and are about a thing called a bill of sale, which should be outlawed. If we cannot get that on to the statute book as part of this process, we are really failing.
I think the question of bailiffs will come up through the report of the Ministry of Justice on bailiff operation. There is a clear need for a statutory basis for bailiffs’ operations. A good code of practice and some form of redress system would contribute considerably to assisting those in trouble. Those are details to be followed up. I include in that the pensions dashboard, which the Minister did not touch on but which is also an important step forward.
The most reverend Primate the Archbishop of York was right to say that there is still too much high-cost credit around. The corollary of that is that there is still a problem about low-cost credit being available at the appropriate time and in the appropriate amount to those who, curiously, borrow the most in our society. The poorest in society borrow more than those further up the income scale because they have to. As they are paid on a short-term basis or are living on limited amounts of money, they have to borrow when big expenditure arises. The system does not provide for that—not even for basic bank accounts. We need to go back to that and think more about savings. Auto-enrolment is a huge success. A lot of thinking by the Treasury has contributed to it—under previous Governments as well as under the current one—and it is to be given great credit. When it was first proposed when I was in a think tank, I thought it was the daftest thing I had ever heard of—making people contribute to savings when there were so many other pressures on them—but it has been a huge success and I am very glad that it is there.
However, it is only part of the story. It is far easier to borrow money in this society than it is to save. Why is that? Why do we have perverse incentives about people being able to accumulate cash that would see them through? I did not cite the statistics in the StepChange yearbook, but it is still incredible that a huge number of people do not have enough money from their current income to see them through one month’s problems. We must do something to help them.
The most important strand is education. We delude ourselves if we think that by simply asserting that this is an important area that should be in the national curriculum we will achieve it. Both my noble friend Lord McKenzie and the noble Baroness, Lady Neville-Rolfe, have experience of trying to get this to work in previous Administrations and I wish the Minister well with it. Is there anything we can do to ensure not only that this is seen as a good idea but that it is taken up by those with the ability to deliver, particularly given my noble friend’s points about the new environment? The Government’s only statutory ability is in relation to the limited number of schools that are still a local authority concern, but they have no lien in terms of forcing through the curriculum for academies or those schools in private hands. There are situations where kids will not learn what we all know they need to learn. Exactly like the noble Baroness, I wish I had known at the time, when I could have done something about it, what I know now when I am in such straitened circumstances.