Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2018

Debate between Baroness Buscombe and Lord Deben

Tuesday 15th January 2019 Lords Chamber

[Baroness Buscombe]

I can inform the noble Lord. He is absolutely right that a formal consultation was not considered necessary for these changes as there is no policy change and they make only minor and technical amendments designed to ensure that UK legislation operates effectively on the day the UK leaves the EU.

[Lord Deben (Con)]

My Lords—

[Baroness Buscombe]

I will give way to my noble friend. However, I would like to answer the question on making the changes and re-laying the regulations.

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[Lord Deben]

I interrupted only because my noble friend might be able to answer my question at the same time. The question is this: if it were not thought necessary to have the consultation in the first place, but then it was found that by not having the consultation the orders had to be taken and re-laid, would it not have been better to have had the consultation in the first place—and would it not now be better to have consultation, because that is the fundamental issue in all these matters? It is not that they somehow get outside the withdrawal Act, but that they do not have the proper consultation we need.

[Baroness Buscombe]

My Lords, it was as a result of ongoing communication with our industry stakeholders that we discovered that it was important to re-lay the regulations. In a sense, there was not a formal consultation, but we do have ongoing and constant communication with industry stakeholders who will be affected by these minor and technical amendments when we leave the European Union. I stress that we were very concerned to correct a fault in terminology, which is why we withdrew the original draft.

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[Lord Deben]

My Lords, if I had not gone through earlier debates, I would have agreed with the noble Lord. I want to make it clear that whatever certain government sources may say, there may well be some sort of arrangement as far as the Opposition are concerned but it is not one in which I have been involved at all. I went to listen to some later SIs last week. In listening to the debate, it became clear to me that a number of assertions were being made by the Government which, frankly, did not stand up.

Of course, the whole problem with these SIs is that the Government constantly remind us that they hope they will never be implemented and this is all about the possibility of there being an exit with no deal. But that does not mean, as I am sure the noble Lord, Lord Kirkwood, will agree, that we can ignore these SIs because they probably will not happen. Of course, as the days go on, that becomes less and less probable, in my view. Now that the Prime Minister has said that it is more likely that we will have no Brexit than a no-deal Brexit, perhaps one may be happier about it. But I am not here because I happen to believe that Brexit is a nonsense. I am here because I believe that there are some really fundamental things in these SIs.

The first is the assertion that we do not need to work too hard on them because they are not going to happen. That seems unacceptable.

[Baroness Buscombe]

When have I made the assertion that we do not need to take time on them? We have spent an enormous amount of time in the department ensuring that what we carry out in relation to these SIs is detailed and careful, to the best of our ability.

[Lord Deben]

I was not making the assertion about my noble friend; I was referring to the meeting of the Grand Committee last week, when that was very much the underlying assertion. That is all I was doing. I do not wish to make any such implication or accusation about my noble friend, whose presentation was perfectly right and reasonable, except that it is based on falsities. I will go on to the other falsities on which it is based.

The second falsehood is that this SI is not making much difference and therefore we do not have to go through the usual procedure. The difficulty with that is that there is a definition here which I find very peculiar. The definition of “impact” refers only to the direct impact of what is in this—the impact on people in the United Kingdom who do not have anything outside the United Kingdom, and who are concerned only with the United Kingdom. There is no reference to the cost of or the damage done by these regulations to those who are in the United Kingdom but have arrangements outside the United Kingdom within the European Union, who will be seriously disadvantaged because the UK will not be within the same arrangements. I realise that that is a result of Brexit but the idea that you can assess the impact without mentioning that seems very peculiar. If you mention that, you have to have an impact assessment. I am very suspicious of this because I think the Government do not want an impact assessment that explains to people precisely why exit from the European Union is so damaging. I do not understand how we are supposed to deal with an SI when it says simply that there is no, or no significant,

“impact on business, charities or voluntary bodies”.

That is the second reason that it seems to me that this is a kind of fudge.

The third reason, and this is the most important thing that I want to say, is about consultation.

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[Baroness Buscombe]

My Lords, if I may be helpful to the House, I think I made it clear to all noble Lords that, because of consultation with the industry concerning this fairly niche area within the pensions industry of cross-border activity with the EU, we learned that one word was wrong within the draft regulations. Therefore, notwithstanding what may have happened with other SIs that noble Lords have been debating in recent weeks, with regard to this SI, one word was out of place and, quite rightly, the pensions industry alerted the department, which withdrew the draft regulations. As the noble Lord, Lord Kirkwood, so helpfully stated, the reality is that this happens. It does not happen on a regular basis. I cannot believe that, when my noble friend was Secretary of State, every piece of legislation he brought forward was perfect the first time round.

[Lord Deben]

I perfectly agree with my noble friend that I did not always produce legislation that was perfect the first time round. However, I did consult. I would not have dreamed of having a situation like this, where after I had published the legislation and told people that there was no need for consultation, I then found that there was a need for consultation. In this case, my noble friend is coming to the House and saying, “Although we got it wrong the first time, we know we are not getting it wrong the second time”. I know that she does not wish me to refer to what has gone on in other SIs, but the trouble is that there is beginning to be a pattern here. There is an assertion that proper consultation is not needed but it is then found, after they publish the document, that a series of people from the industry come up with really very serious matters. In two cases, those matters could affect the lives of people in this country because of the way in which the legislation has been framed. My noble friend really does have to understand that we are not having this argument for some esoteric reason or because we happen not to like the withdrawal Act. We are having it because, by accident, we have come to understand that when you work this out, discuss it and think about it, it does not turn out to be quite the legislation that we were told it was. That is the next reason why I find it difficult to accept this SI.

Then there is the question of cost. Evidently, it was not thought necessary to have a consultation because it would not be cost effective to have one. I do not know how much it costs to withdraw an SI and then to replace it, but that does not seem to be a cheap alternative to having a proper discussion in the first place. I do not understand why there could not be a consultation. After all, if the consultation had taken place at the time the original SI was laid, it would have happened, it would have been over, and we would have known that there had been such a consultation.

Lastly, I will talk for just one moment about the whole question of cross-border activity. This SI says, “If we leave the European Union, and if we leave it without an agreement, we are putting in place something that will enable us to be an island which does not have any outside connections at all but our own internal arrangements”. This means that we are going to reduplicate what are, at the moment, some of the arrangements which are done across the whole EU. I do not see here the cost of having entirely our own system and the cost to pension operators in this country of having to make new cross-border arrangements themselves. That does not come into the impact assessment. There is no question about that cost, but it is not here. All we have here are the costs of that very narrow area which the Government have decided is what is defined as “cost”. Yet the Government are going to have to accept that pension people in this country will have the cost of making arrangements so that they can do the things they are doing at the moment inside the European Union. This is a cost, but it is not here.

I know my noble friend is bored with it and thinks that we should let this all pass, but this House is about revision. We have made a mistake with this particular SI. We should recognise that all these SIs need to have at least a formal consultation. There should be a time when people can be asked to put in their concerns; the ability for a Minister to get up and say, “We have had a consultation”. I think it is unfair on my noble friend. She can only get up and say, “Well, there has been an informal series of talks”.

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[Lord Deben]

I will answer the noble Lord, but I do not want to prolong my remarks. I am already a bit fed up with being told that I must not talk about these things because it takes too long. I find it extremely difficult but it has to be talked about. The noble Lord is entirely right. This will be true and, if so, I have to declare my interest as chairman of PIMFA. I have some allied interests, but not as far as pensions are concerned.

I come back to my noble friend. There is national concern about the responsibility of government and Parliament. That leads me to say very seriously to her that if it looks as though you are hiding the consequences of decisions that you make, that does a great deal of harm. Not having the proper costs here—

[Baroness Buscombe]

My Lords, I must intervene at this point. I take great exception to any suggestion that I am seeking to hide anything at this Dispatch Box. I hope that the noble Lord—my noble friend—will apologise.

[Lord Deben]

Frankly, I did not say that my noble friend was hiding it. I said, “If it looks as if you”—and I am not referring to my noble friend but to the Government who have laid this SI—“are hiding”. She really cannot take exception to that—well, she has taken it, and if exception was taken, I apologise for any reasonable exception—but really, I say to my noble friend that we are trying to debate this issue. I was saying that if it looks as if you are hiding something because you do not include the costs of withdrawal, the public will find that difficult to accept. I do not think that I have accused her of anything, and trying to get upset about it is not acceptable.

All I am saying to her is that I hope that she will talk to the people who have laid these instruments and have not told us directly the costs. I believe that they intended not to tell us the costs, because if people add up the costs of Brexit in each of these SIs, they will begin to see why some of us have been so concerned.

I end by saying simply this. We need to have proper consultation and proper costings—not just generalised ones—and, when we have a changed SI such as this, which has been changed because we did not have a consultation, it would have been much more reasonable to have had a consultation before this SI was produced. I do not believe that it is possible for a Minister to get up and say that there is no need for consultation because we know that it is perfectly right. So, for all those reasons, I think it is perfectly correct that we should be having the kind of debate that we are on this SI.

Financial Guidance and Claims Bill [HL]

Debate between Baroness Buscombe and Lord Deben

Committee: 4th sitting (Hansard): House of Lords
Wednesday 13th September 2017 Lords Chamber

[Baroness Buscombe]

I am trying to make the point that the transfer of claims management company regulation to the FCA will result, we believe, in tougher regulation and should reduce the number of unsolicited calls made by CMCs. What I am really saying is: can we please give the FCA a chance? While there are already measures in place to tackle unsolicited calls, enforced by the Information Commissioner’s Office, unfortunately there is a minority of disreputable companies which flout the law. The ICO will take enforcement action where appropriate; as I have said, in 2016-17 it did so against 23 companies. We need to improve on this and we hope this will happen through tougher regulation.

I hope I have explained the difference between cold calling for CMCs and cold calling for pensions, which we are taking action on. I think my noble friend Lord Deben was suggesting, as indeed were other noble Lords, that we should have a wholesale ban on cold calling, but one has to be really careful what one wishes for. This point about access to justice is very important. Clearly, there are different routes to making unsolicited approaches. If we had a wholesale ban on cold calling, what would political parties do?

[Lord Deben]

I was not going to interrupt my noble friend but since she has mentioned it, the matter is very clear. We are talking about cold calling for a particular purpose. She has to accept that there are 50 million calls and the number is rising all the time, so the present system does not work. It is very simple: we just ban them. Why can we not do this? I do not understand.

[Baroness Buscombe]

I think I have just tried to explain that one of the reasons for transferring the regulatory role to the FCA is to take this forward through good regulation in the hope that it will work. As I was trying to say, we have to be careful what we wish for in terms of access to justice through the means of people being able to receive calls, which we can call unsolicited—such as those made by political parties. That is part of a wholesale ban on cold calling, which noble Lords have referred to.

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[Lord Deben]

I am sorry to interrupt my noble friend again, but I specifically did not do that. Better regulation is to ban the calls. That is what better regulation is.

[Baroness Buscombe]

I thank my noble friend for his further response.

To respond to my noble friend Lord Trenchard’s question about whether SMS, email and letters are all cold calling, this is an important point and I confirm that we differentiate between them. Cold calling is the solicitation of business from potential customers who have had no prior contact with the salesperson conducting the call, while unsolicited direct marketing is communication by any means, including email and text, of marketing and advertising material. We genuinely believe that the existing measures I have set out, alongside the new FCA regime, should help tackle CMCs conducting unsolicited direct marketing. I know there is a very strong feeling across the Committee, and we take this on board, but, for the reasons I have set out, the Government do not believe that the amendment is necessary. I hope that the noble Lord will withdraw his amendment.

Financial Guidance and Claims Bill [HL]

Debate between Baroness Buscombe and Lord Deben

Committee: 3rd sitting (Hansard): House of Lords
Monday 11th September 2017 Lords Chamber

[Baroness Buscombe]

I thank noble Lords for their scrutiny of Clause 6, which requires the body to set standards from time to time for the delivery of its information, guidance and advice services. It also requires the body to obtain the FCA’s approval prior to finalising the standards and to publish the standards. I understand that there has been concern among the debt advice sector that the body’s standards will apply to all debt advice providers. I reassure the Committee, and others, that the single financial guidance body is not a regulator. These standards will apply only to the body itself and its delivery partners.

I turn first to Amendments 49 and 54, tabled by the noble Lord, Lord Stevenson, which set out an alternative to setting standards for service delivery. Amendment 49 would require the body to publish a commissioning framework against which it would test the competence of service providers when delegating any of its functions. Amendment 54 would require the body to consult on this framework and to obtain the approval of the FCA.

The setting and publication of standards, and their monitoring and enforcement, provided for in Clause 7, are designed to give assurance to members of the public that the information, guidance and advice services provided by the body meet robust criteria. These standards will apply only to the body itself when it is delivering these services directly, and to any delivery partner organisations it engages to deliver these services on its behalf.

The noble Lord proposes to replace the requirement for the body to set standards with a commissioning framework, but there is a difference between these two. The proposed commissioning framework would only set out requirements that the body’s delivery partners must meet to enable bidders for contracts or grants to understand what the expectations were. The standards will set out the requirements that both the delivery partners and the body itself must meet. The standards will play an important role in enabling members of the public to have confidence in the services provided by or on behalf of the body, and both could not and should not be replaced by the proposed commissioning framework.

When contracts are above a certain value, the body will be required to comply with the Public Contracts Regulations 2015, the regulations that govern public procurement, including the requirement to advertise its requirements and undertake a competitive tendering exercise. Where the size of the contract is below the thresholds cited in the regulations or where the body will be making grant arrangements, we would expect it to follow similar principles.

If the body decides to delegate any of its guidance or advice functions and procure services from other providers, we would expect it to publish its requirements, including any technical requirements, with adequate time for delivery partners to prepare their propositions. It is unnecessary to be specific about this in legislation, as we would expect the new body to build on the good practice of existing organisations. For example, the MAS already has a commissioning framework for debt advice.

Amendments 50 and 55, tabled by the noble Lords, Lord McKenzie and Lord Stevenson, would require the single financial guidance body to consult on the standards. The body will be able to set different standards for different types of information, guidance and debt advice. One size will not fit all. For example, standards for an online service such as the body’s website would of necessity differ from standards for a face-to-face guidance appointment. In addition, the body may need to develop standards if new services come online or if the nature of the service provision changes. We would expect the body continuously to review its service standards. This will be important to the body’s board in ensuring that its services remain customer focused.

In developing and updating the standards, we would expect the body to work closely with a range of stakeholders, including delivery partners—large and small; I stress that to the noble Earl, Lord Kinnoull—devolved authorities and consumer representatives, to ensure that the standards it sets are robust, cover a range of qualitative and quantitative measures and can be properly monitored. The noble Lord, Lord Stevenson, asked how the body would set its standards and what they might be, and about the consultation with the FCA. We would expect the standards broadly to cover delivering the guidance, advice and information, professional standards, communications systems and controls, complaints management and content of the guidance session.

Prior to anything being published, the body is required to gain the approval of the FCA. The FCA will add value by providing independent scrutiny, and the standards will benefit from the FCA’s expertise in relation to financial services and the debt advice sector, and its experience in setting the standards for Pension Wise. Having the input of the FCA will also ensure that the body’s standards complement the FCA’s debt advice authorisation process. As my noble friend Lord Deben has stressed, it is important that there be clarity.

Should the body consider it valuable to conduct a consultation exercise before setting or revising its standards, it could do so. However, I do not consider it necessary or proportionate to require in legislation that the body undertake a formal consultation process, particularly as this would apply even to very minor revisions of the standards.

Amendments 51 and 52, tabled by my noble friend Lady Altmann, return to the debate on earlier amendments to Clauses 2 and 4. There, I made the case that “debt advice” is the appropriate term to use in the functions of the body. I have also written to my noble friend with further explanation of the terminology used in the Bill. The Government believe that it remains the right term here. I apologise for going over old ground with these arguments, but I want to do justice to my noble friend’s amendments.

First, “debt advice” reflects a broader set of activities than “debt counselling”, and this broader set is what the new body will have a duty to deliver. Secondly, similar to independent financial advice, debt advice is an activity regulated by the FCA. Using the term “counselling” may mislead customers who are actually receiving regulated advice. I hope that this is a further response to my noble friend Lord Deben. It is particularly important that we do not confuse customers by introducing other terminology. We should be very clear here on the vital service this body will provide. It will fund and co-ordinate—

[Lord Deben]

I thank my noble friend for referring to me. I do not want her to believe that I do not agree with my noble friend Lady Altmann. The fact is that we have had far too much trouble in the past with the word “advice” being used wrongly. “Advice” should be used only when it consists of somebody who is on your side and giving you advice personally and individually. That is not what we are talking about here; “counselling” or some other word should be used. I hope the Minister will not include me in her supporters on this particular point. This is really serious and we ought to think again.

[Baroness Buscombe]

I hear what my noble friend is saying. I hope he read in Hansard what I set out in detail on day 2 of Committee and what I wrote to all noble Lords. I commit here to spend more time between Committee and Report trying to persuade noble Lords of the reasons why we feel it right to stick with the current terminology regarding the difference between debt advice and guidance, not least because this is already set out in regulations, at the FCA and so on. We are very keen to avoid confusion or duplication. We also very much take on board the experience and expertise we have heard from those who have given this guidance and debt advice for more than 30 years. They said they had never had a problem with this. However, I hear what my noble friend said and can see that I must do more to persuade some, though not all, noble Lords—there is great support for what the Government are trying to do. I can only stress the number of consultations we had prior to introducing the Bill to ensure that we are doing the right thing to the best of our ability, particularly in our focus on the consumer.

Most people who access debt advice have lived with debt problems for more than a year before doing so. They may be facing up to something they have avoided for a long time. They seek help because they do not know what to do. They turn to services such as the Money Advice Trust, Citizens Advice and StepChange, which are all MAS delivery partners, for urgent help with getting out of their immediate crisis. Although there is a clear difference between debt advice and the advice given by independent financial advisers to those lucky enough to have some extra money to pay for it, the advice given by debt advice is still regulated by the FCA.

Debt advisers help people identify the steps they need to take, recommend a course of action, represent people at court facing repossession and, crucially, build their clients’ confidence to deal with their creditors themselves. Under FCA rules, these excellent advisers are required to make it clear that they are giving a customer regulated advice. These individuals need help to work through their problems. They want advice on how to get out of the situation. The labels we use to describe the service on offer must reflect the way these customers use and understand the service. For these reasons, I maintain that debt advice is the most appropriate term to use.

Amendment 53, tabled by the noble Lord, Lord McKenzie, would require that the standards include measures of outcomes for members of the public as well as measures of outputs for the body and its delivery partners. The noble Lord raises an important issue but I do not agree that attaching this requirement to the standards is the right approach. I reassure the noble Lord that assessing the body’s success in improving the ability of members of the public to make informed financial decisions will be very important for both Her Majesty’s Treasury and the Department for Work and Pensions.

The Committee discussed during debate on Clause 1 the business planning process for the single financial guidance body. Part of that process will be for the body to agree a range of key performance indicators with Her Majesty’s Treasury and the DWP. These will be set out in the body’s corporate strategy and business plans. The corporate strategy and business plans will be published, and will include how the indicators will be measured. It is too soon to set out exactly what the performance indicators will be for the body but, as an example, Pension Wise is testing its customers’ knowledge of the pensions freedoms and comparing it with that of a group of non-users of its service. This research seeks to ascertain what difference Pension Wise is making to people’s understanding of their options under the pension freedoms. This evaluation is also recording customers’ intentions shortly after their Pension Wise appointment and any actions they have taken about three months after their appointment.