Financial Services and Markets Bill [HL]

Baroness Altmann Excerpts

Committee stage
Monday 22nd June 2026 Grand Committee

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I oppose Clause 1 and Schedule 1 standing part of the Bill. I shall speak also to my detailed amendments to the schedule, which appear as Amendments 4 to 17.

We all know how consumer agreements work, whether for credit or anything else. There is always an asymmetry of power between the provider and the consumer. Nowadays, it is often impossible to speak to a person rather than a bot. If you do get a person, it is a call centre with scripted questions and answers, often including a recital of terms and conditions faster than it is possible to understand. You cannot get to the next stage without saying, “Yes, I have understood and agreed”, when, in truth, you have not. You do not even see the terms and conditions until after you have clicked “Yes”, then you are given a time-limited right to withdraw. This back-to-front impatience to get boxes ticked first is now a feature of the modern consumer environment—one that I fear we have now replicated in the legislative procedures in the Bill, only here, once Parliament ticks the box, there is no cooling-off period and no right to withdraw.

The Bill repeals parts of the Consumer Credit Act. It gives the Government open-ended regulation-making powers before there has been any consultation and before we have seen the shape or operation of any FCA rules. I cannot support that. It goes too far, too fast and too unseen. That is not the way to make irrevocable changes. So I will not tick the box. I want to know what I am signing up to, just as the consumer must. I want to know that what are presented as rights are, in fact, rights.

Clause 1 repeals statutory rights before replacements exist. The Government take powers to make regulations before consultation. At the very least, that is a reason to take a great deal of notice of what is being said by Parliament. I also question whether this approach meets the Government’s own statutory duties under the Legislative and Regulatory Reform Act 2006, which requires regulation to be proportionate, accountable and transparent. Repealing rights before replacements exist does not seem to meet those tests. This is a fundamental change from the status quo, where rights are in statute and rules are made to assist in negotiating the statute.

Clause 1 reverses that. It removes statutory protections now and offers only a possibility of regulatory rules later. Rules are not rights. Rules can be changed by the rule-maker, whereas rights bind everyone, including the regulator. The Government’s approach is, therefore, constitutionally backwards. Parliament is being asked to repeal rights without knowing what will replace them. It is like signing a credit agreement without knowing the terms, and we are being asked to sign it on behalf of the public.

My solution would be to preserve a statutory floor, both now and in future, and not a temporary one that could be slowly eroded at the whim of the Government or a regulator. My amendments to Schedule 1 are intended to show how this can be done; I thank Which? for its assistance in preparing them. They aim to preserve important provisions in relation to notices of arrears and default sums, as well as the unenforceability sanctions attached to them in the Consumer Credit Act. These are the legal backstops—the protections that ensure that rights are real.

I shall explain what my amendments do and why they matter. First, they would preserve the requirement to serve notices of arrears and default sums and the statutory consequences of failing to do so. These provisions apply, for example, where a borrower has fallen behind on payments. A default notice must be served before a creditor can take certain drastic steps such as terminating the agreement, demanding early repayment or recovering goods and land. Default notices also play an important part in determining when debts become statute barred, because, once served, lenders have six years to take court action. Secondly, they would keep these protections in legislation but allow the FCA to modernise the form and content of the notices. That is the right balance. Technology changes, as does the way in which information is presented, but the underlying rights do not and should not.

The Government’s approach is to repeal the majority of the CCA provisions with the suggestion that they could be recast into FCA rules at some future point, subject to consultation. That means there will be no parliamentary scrutiny of what these protections might look like once they are repealed. My amendments would guarantee that the core protections remained mandatory legal requirements while allowing the FCA to update the way in which information is provided. That is what the legislation should have done from the start—modernise the form, not abolish the substance.

I turn to sanctions, which is where the Consumer Credit Act is at its strongest and where the Bill is at its weakest. The sanctions in the CCA were included in 1974 because Parliament recognised the significant imbalance of power between a consumer and a creditor. Parliament wanted proactive compliance with the law, not a system where an individual consumer must detect a breach, voice a complaint, and then pursue slow and time-consuming legal or ombudsman remedies, particularly when those consumers are likely to be vulnerable, stressed or in financial difficulty.

The sanctions ensure that a creditor cannot take steps against a debtor while the creditor is non-compliant with the law. They are automatic. They work because they require compliance up front, not after the harm has occurred, and they cannot be replicated in FCA rules. Without those sanctions, consumers may face new threats from being pursued for debts, particularly when debts are sold to unauthorised debt purchasers. The burden shifts on to the consumer to detect breaches and seek redress. Vulnerable consumers are disproportionately harmed, and the automatic reprieve that Parliament deliberately created is lost.

My amendments would ensure that those sanctions on arrears and default notices remained in legislation while allowing the FCA to modernise the way information was presented. That would preserve vital individual rights while recognising that flexibility is needed in a digital age. That is not an unusual approach. The CCA and the FCA’s existing consumer credit rules already operate in a complementary way.

The amendments I have tabled focus on arrears and default notices because that is where the greatest harm would arise if protections were removed, but they are only exemplary. They show the balanced approach that should have been taken across the whole reform of the Consumer Credit Act: move form and content to the FCA rules where appropriate but keep the substantive protections in legislation. I am looking for that complete reform.

There are other areas, such as the form and content of credit agreements, the duty to provide information under fixed-sum and running-account agreements, and the sanctions for improperly executed agreements, where the same balanced approach could and should be taken. I would be happy to meet to discuss those. The Government’s own consultation on CCA reform was meant to have two phases. Phase 1, on information requirements and sanctions, took place, but phase 2, on key consumer rights, was scrapped. That is not a sound basis for repealing rights now and promising rules later.

The CCA was ground-breaking for creating automatic protections, even if at times those protections have been bitten for trivialities. That is a reason for modification, not cancellation. Their purpose is still relevant: ensuring active compliance, preventing regulatory creep and protecting vulnerable consumers. They cannot be replaced with certainty in FCA rules. Their removal shifts the burden on to consumers. This is a regression in consumer protection at a time when modern communications already curtail the time for circumspection.

If the Government were bringing forward a coherent replacement for the Consumer Credit Act, it would look something like this: statutory principles of fairness, transparency, good faith and protection against unequal bargaining power. Those are not exotic ideas; they exist in other jurisdictions. Australia’s unconscionable conduct regime is one example. At the end of the day, businesses must think and exert conscience and play fair, but that is not what Clause 1 does. It removes rights without replacing them. Modernisation is possible but I will not tick the box on behalf of the public until I have seen the replacement and until I know that it preserves rights now and in the statute. I beg to move.

[Baroness Altmann (Non-Afl)]

My Lords, I must apologise: I was not in the country for Second Reading, so this is my first intervention on the Bill.

I support wholeheartedly the amendments in the name of the noble Baroness, Lady Bowles, and the rationale that she has just explained. I thank Which? for the work that it has been doing on the Bill and to try to help consumers.

I cannot support this leap in the dark for parliamentary scrutiny and I cannot support imposing this leap in the dark on consumers. At the end of the day, that is what the provisions in Schedule 1 are at risk of doing. I believe that the noble Baroness, Lady Bowles, with her amendments, and the amendments that we have seen from other noble Lords in the first group, are seeking to help the Government to achieve their aims more safely for consumers. I believe that what the Government are trying to do has the right motive; it is about whether the manner in which this is being done is safe for us to agree to—and I do not believe that it is.

If we think one step ahead, what protection will consumers have against the FCA making a significant error in its regulation? What protection will consumers have if the asymmetry of information and power that we know already exists in the financial services industry, especially for retail customers, continues along its current lines? I hope that the Government and the Committee will recognise that leaving consumer protection to the regulators is not a safe thing to do if you want to improve consumer protection—and, as I say, I believe that is what the Government would like to do.

The FCA has a peculiar regulatory style. For example, if it has discovered or suspected wrongdoing, it does not, as you might expect, do mystery shopping on behalf of consumers. It will ask firms generally to investigate how they behave and then to report to the FCA. That may work but it will not always work, and there is no fallback protection such as we have in the Consumer Credit Act if the consumer experience is not as it has been portrayed or as the FCA might have expected. There is a consumer panel as part of the FCA, but, in my experience with a number of financial scandals or problems that have arisen for consumers, the FCA consumer panel has little or no power. It is not listened to and does not form part of the FCA regulatory decision-making process that perhaps one would need to be confident that it represents in the case of passing on this protection to the FCA.

I hope that the Minister and the Government will listen carefully to the arguments that have been made so far in the first two groups and recognise the damage that could be done by pursuing the proposed actions.

--- Later in debate ---

[Lord Davies of Brixton (Lab)]

I just wanted to say that I have a lot to say on the Financial Ombudsman Service but I shall save it all for group 6.

[Baroness Altmann (Non-Afl)]

My Lords, first, I declare an interest, which perhaps I should have done at the beginning. I am a director of a pension company that is regulated by the FCA. I apologise for not having declared that earlier.

I will reflect on an issue that could arise because the Financial Ombudsman Service is in charge of complaints about pensions. We know that many people who are taking out pensions products may have problems that do not become apparent to them for six or 10 years or beyond. Perhaps we could consider an amendment that would carve out the extent to which the Financial Ombudsman Service deals with a pension complaint in relation to this element of the Bill.

[Baroness Kramer (LD)]

My Lords, I have only a few comments on this group. As I listened to the comments on Amendment 17A, particularly those of my noble friend Lady Bowles and the noble Baroness, Lady Altmann, I understood what reminded them of mortgage prisoners. In that case, people who held mortgages with banks that failed, and who were rescued by the Treasury, were then sold on to private holders who were not themselves lenders of mortgages. In effect, they lost the ability to refinance, and so they remained imprisoned in very high-rate mortgages at a time when everyone else was able to remortgage. We can see echoes of that in some of the limitations that would be introduced by these amendments. I am therefore always concerned about those time limitations, particularly in situations where assets can be sold on, as they often and increasingly are today.

Amendment 44, from the noble Baroness, Lady Neville-Rolfe, seeks to deal with the issue of consumer redress. If a consumer has been abused in some way and has a moral right to redress—a right in law—should that be lost simply because we have a regulator that fails to act promptly and within a reasonable time? I understand that it is tough for the industry, because it leaves it with uncertainty, but some of these products are life-changing for individual consumers and have life consequences. That is what made me think of mortgage prisoners; their lives were completely ruined by that process.

Where there are such consequences for the individual, it is very concerning to take away the right to redress because there was a delay in the functioning of the regulator. I understand that it means that the industry has to live with uncertainty, but my advice to it is to behave well to your customers. That really is the very best way not to get into these issues.