Further Developments in Discussions with the European Union under Article 50 of the Treaty on European Union
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(5 years, 1 month ago)
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Baroness Hayter of Kentish Town (Lab)
My Lords, the noble Lord, Lord Hodgson of Astley Abbotts, says, “It ain’t over till the fat lady sings”. I am not sure whether he is expecting me to break into song to signal that we are near the end of this debate, or whether he was referring to the Prime Minister, who is touching down about now in Strasbourg.
Lord Hodgson of Astley Abbotts
May I say to the noble Baroness that I was not referring to her in any way? The man on the Clapham omnibus is a theoretical person and so is the fat lady in the example I gave.
Baroness Hayter of Kentish Town
Listening to Ministers—not tonight, but on other occasions—one might think that the lack of an agreement is all the EU’s fault. However, of course, it is we who chose to leave the EU: that is, we as a country, not necessarily as individuals. Mrs May chose her red lines before she understood the task or consulted those who did. Mrs May chose to trigger Article 50 and thus our exit day. It was the Prime Minister who chose our negotiating lead: he resigned. Mrs May chose our second negotiating lead: he resigned. Mrs May chose our third negotiating lead: he could not hack it, so she then sent the Attorney-General over, and now we find that he cannot hack it.
The truth is, of course, that all those faults lie with the Prime Minister. She failed to reach out to the 48% —who, my noble friend Lord Rooker reminded us, are 15.8 million people—who might accept that they lost the referendum but surely still have the right to a Brexit that would be the best possible one for the country. She failed to reach out to the Opposition, even after she lost her majority, to see whether a deal could be honed which could be supported across the Commons. She failed to heed anyone other than the ERG, whose concerns for the countries, regions and interests of the UK have yet to be demonstrated. She negotiated a deal that she cannot even sell to her own Parliament: it was defeated by 230 in the House of Commons and looks set for a similar defeat tomorrow. Is it any wonder that one Cabinet source told the Telegraph:
“I would say there are only two ministers in the Cabinet who still support her”?
We heard earlier that one of these is “Failing Grayling”.
How much better it would have been for the country and, indeed, for her premiership, had the Prime Minister heeded this House, but also the Opposition, and crafted a deal which would see us in a customs union with the EU, solving much of the Northern Ireland border checks issue and, importantly, preserving our supply chains and our manufacturers’ major trading routes. Blinded by those ludicrous red lines, the Prime Minister ignored the one path out of her dilemma. In doing so, she ignored the majority of those who voted in the House of Commons against her deal, seeking to bend only to a minority of those who voted against her: the hard Brexiteers. Of course, they fixated on the backstop because, truth be told, they had never considered the Northern Ireland dimension of Brexit before 23 June 2016. As the noble Lord, Lord Kerr, reminded us earlier, it was the UK which proposed a backstop. The EU agreed to it and now the UK is saying, “Oh, we do not now agree with our own proposal, so please will the 27 change it?”
Throughout this sorry saga, the Prime Minister and her team have shown little respect for the EU, its Parliament, which has to agree the deal, or its key players, who find themselves addressed via a lecture in Grimsby, rather than across the table.
The Government have failed to respect both the EU negotiators and staff who have devoted untold hours to implementing a decision taken by the UK and the 27 rather busy Prime Ministers who keep having to add this to their already demanding agenda. Indeed, it hardly seems conducive to a better outcome for our Foreign Secretary to threaten that relations with the EU will be “poisoned for many years” if Brussels fails to budge in the talks and that,
“future generations, if this ends in acrimony ... will say the EU got this wrong”.
There is no blame to our government; everything is the fault of the EU. Perhaps that is what leads the noble Lord, Lord Armstrong of Ilminster, to say that he has never felt a greater sense of shame.
As the noble Lord, Lord Finkelstein, has made clear, the one way not to leave the EU is without a deal, because of the sudden imposition of WTO tariffs and the ending of existing commercial relationships all built on zero tariffs and shared rules—all without even a transition period for business, importers, exporters and our ports to prepare. As for holidaymakers, perhaps 1.5 million of their passports may not work across the 27 member states because there is not enough time left on them. Their health cover will be lost; there will be queues at Eurostar and ports. This is to say nothing of their not being able to take their pets with them. They will not like that hard crash out as reality bites. Crucially, it would leave our UK citizens living across the 27 countries in a legal limbo, their healthcare, residency, jobs, and even driving licences uncertain. That is all without the opportunity costs mentioned by the noble Lord, Lord Horam, and the health, crime, housing and education issues that we are not dealing with because of the attention and money being spent considering no deal.
The noble Lord, Lord Howard of Lympne, warned of a loss of trust if we fail to leave on the 29th of this month. But there will be a much greater loss of trust if we leave in such a way as to damage the very people who voted for Brexit. So where do the Government go from here? It is possible they are going to need a Bill I have just been sent. It is the Bill on how to revoke Article 50—the draftsman was worried that the Government did not have it, so just in case they need it I offer it to the Minister.
If the Prime Minister fails to engage with the Opposition, with those willing to take the country forward on a consensual, constructive route, she risks being written up in history, either as my noble and learned friend Lord Goldsmith described—as Vladimir waiting for Godot, perhaps with the noble and learned Lord, Lord Keen, as the boy, waiting for an impossible majority to arrive—or perhaps, more seriously, as a chapter in the next Christopher Clark version of The Sleepwalkers. This is the book on how the 1914 leaders took Europe to war by simply sleepwalking into it. She may do the same by dozing on the job, so that the UK falls, heedlessly and unnecessarily, into the economic insecurity and diplomatic catastrophe of an unplanned, unwarranted and unnecessary no-deal exit from the near half-century of co-operation, growth and development we have had with our near neighbours in the EU.
It is not for this House to pass judgment on whether the Prime Minister has the confidence of the Commons. But I can say with absolute confidence that the Opposition have little faith in her approach to Brexit, in her deal and in her ability to negotiate an acceptable way forward in the interests of the whole of the UK. Our future is in her hands. I hope that makes others sleep easy, because it does not me.
Charities (Protection and Social Investment) Bill [HL]
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(8 years, 10 months ago)
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Baroness Hayter of Kentish Town
My Lords, this amendment is also in my name and that of my noble friend Lord Watson of Invergowrie. When we are discussing it, we refer to it by the shorthand “Olive’s Law” as it arises from the complaints about somewhat overpushy fundraisers in the wake of the tragic suicide of 92 year-old poppy seller, Olive Cooke.
As the Minister knows, hundreds have since reported how they, too, came under pressure, with particular concerns about the elderly, some with dementia, being targeted. At Second Reading, I referred to the Mail on Sunday story of the underhand methods of a private company which appeared to break every rule in the book to make money for itself as well as for charities that were employing it. Cold calling is a particular curse of the housebound and risks damaging trust in charities. We also see charities, having secured one donation, ratcheting-up demands, leading people to fear that if they give they will just be asked for more.
The issue is whether the existing self-regulation is working. Our view is that it is not. A third of fundraising charities are not even members of the Fundraising Standards Board, and charities or the private companies they use can continue to fundraise even if expelled from the board.
The Fundraising Standards Board self-regulation system, which is effectively funded and run by and on behalf of those it seeks to regulate, has, we say, failed to work. It has not done the monitoring to check up on its members. Indeed, without the tragic case of Olive Cooke and the exposé by the Mail, we might know nothing of these practices other than from the anecdotal complaints we all hear about in our personal lives. I was with some elderly friends last night, and without me even raising the question it was one of the things that kept coming up in conversation. However, it was not coming to us from the board that should have monitored this.
The Fundraising Standards Board has not publicised its existence, meaning that those with complaints never took them to it, and it has not outlawed unacceptable practices. This, of course, is not just my view. The Minister for Civil Society, Rob Wilson, calls this,
“a critical time for charity fundraising”.
He concludes:
“Charities’ hard won reputation is at serious risk”.
His “last chance saloon” warning was for charities to show that their fundraising was “beyond reproach” quickly, as they,
“do not have the luxury of time”.
He called on the sector to respect the wishes of householders who do not want to be disturbed at home and to respect “no cold caller” stickers on doors. He also acknowledged that many of us question the self-regulation model. Although it appeared that he favoured one last period of grace, he warned that the,
“window of opportunity … may not remain open for much longer”,
and advised the sector to change rather than,
“allow others to do it for you”.
I do not think that Minister had it quite right with that final warning, but I think he may have moved on since then.
We have concluded that the time has passed for charities to be able to choose whether they want to join the Fundraising Standards Board, or to abide by the code of conduct set by the Institute of Fundraising, by which the FRSB adjudicates complaints, and to put their own house in order—hence, the first part of Amendment 13, which would oblige large charities to belong, thus making their expulsion a matter for Charity Commission intervention. We do not have all charities in mind, but those raising more than, say, £1 million a year. On Report, we will find a form of words to either include a specific figure, or to have the figure set out in regulations, but the principle is clear.
The NCVO, which obviously speaks for many charities, usually prefers effective self-regulation to statutory regulation, as, normally, do we, because it is flexible, responsive, and cost-effective. However, it accepts that the regulatory regime must secure public trust and agrees that there is clear public concern over fundraising. It therefore agrees that self-regulation should be strengthened,
“to a point where an objective observer would say beyond doubt that the interests of the public are sufficiently represented”.
Sir Stuart Etherington of the NCVO said that,
“the correct regulatory regime is not one that is convenient for those who are being regulated, but one that … balances the interests of the public and the regulated … fundraising self-regulation can be successful … but … only … when it is … sufficiently robust and seen to be sufficiently robust”.
The NCVO concludes that change is required, including giving the Fundraising Standards Board a remit over large fundraising charities. It therefore supports Amendment 13, which would require charities to be members of the Fundraising Standards Board, and to abide by the code of fundraising practice. Crisis—which I think of as Crisis at Christmas, although it is a long time since it was called that—one of the charities which would be covered, favours a greater investigative role for the fundraising regulator, with action taken on identifying and dealing with bad practice. It would therefore favour the institute’s code of conduct applying to all large fundraising charities.
The public are with us. More than two-thirds agree that charities should be regulated more. That was before Olive’s case was publicised, so they already had concerns. We are not the first to identify the need to strengthen the regime. There is already a reserve power ready and waiting that allows the Charity Commission to regulate fundraising. It is time to implement this, hence the second part of the amendment, on which we have reason to believe the Government have now reached the same conclusion. Yesterday’s Sunday Telegraph reported that:
“Charities have been given until the middle of this week”—
tomorrow, 30 June—
“to curb their pressure selling techniques to raise money or face action from the charity regulator … Section 64A of the Charities Act 2006 gives”,
the Minister,
“a ‘reserve power to control fund raising’, including imposing ‘good practice requirement’ on charities”.
We want good charity fundraising to continue. We salute the British public, who give more than £12 billion a year—more than the Government’s aid budget. However, we owe it not just to Olive, but to all the many hundreds who have been hassled by charity fundraisers to stamp out malpractice. This amendment is the way forward. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, I have listened carefully to the noble Baroness, and I understand the frustration and disappointment that underlines much of her speech. Before I go any further, I remind the Committee of my tangential connection to Pell & Bales, which is involved in the charity fundraising sector.
My review had a whole chapter—15 pages or more—concerning fundraising. It is one of the areas which caused the most angst, difficulty and comment. The conclusions were that we need to drive forward ways to improve self-regulation because that is probably the most flexible and cost-effective way of regulating the sector, that there needs to be changes in the way that public charitable elections take place and that there needs to be a clear programme for implementing change and monitoring progress towards it.
I shall be making some relatively disobliging remarks about the charitable fundraising sector in the next few minutes. However, before doing so, there is a case for the defence which ought to be put on the record this afternoon. The first point is that charities must have the right to ask. If they cannot ask, then the amount of fundraising that charities will be able to do will fall dramatically. That is balanced by the right of the public not to be unduly hassled. It is that nexus which we are seeking to find in any fundraising regulatory system.
Secondly, the public do not really like any money being spent on fundraising. They would like every pound that they give to go straight to the beneficiary of the charity, not even to be used by the administration of the charity—hence the concerns about the salaries of chief executives in the sector. That is an issue which the sector has not been able to address. There is an argument for explaining to the public that, in order to have effective fundraising, it is possible that you will need to pay someone money for it. The statistics are that a direct debit signed on the street—the so-called “chuggers”—on average lasts for four years or 48 months, and the charities expect to pay 10 to 18 months of that for the work that is done to get the donation in the first place, which amounts to between 20% and 33%. The public would say that it is outrageous that it costs that amount of money, but from the charity’s point of view, they are getting 67p to 80p in the pound that they would not be getting otherwise. There is a difficult philosophical balance to be established.
Thirdly, the legislation is very uneven. The cash collection—the tin-rattling, as we might call it—dates from 1916, and the charitable collections door-to-door regulation dates from 1939, but local authorities have entirely different standards. Some local authorities will give permission in a week or two, others want two years’ notice, and of course in London local authorities do not do it at all as the Metropolitan Police are the licensing authority. Meanwhile, while we are agonising, quite appropriately, about charitable collections, commercial collections have no regulation whatever. They are free to behave as they wish.
Baroness Hayter of Kentish Town
Will the noble Lord accept that when I moved the amendment, I said that I was talking about charities that raise £1 million a year? It would be very nice if Mrs—I’ve forgotten her name—does—
Lord Hodgson of Astley Abbotts
That is absolutely right. The noble Baroness did say that, but her amendment says, “All fundraising charities”. I know she slightly shifted the ground in the middle of her speech, and I accept that.
What, then, is the problem? There is reluctance in the sector to accept that every problem is everybody’s problem. There is a tendency to push the pea round the plate and to blame another sector, so the chuggers in the street blame the telephone collectors, who blame the direct mail people, and so on. They say, “It’s not our problem—it’s somebody else’s”. There is also reputational pride in individual charities: “We don’t do that sort of thing—other people do that”. Therefore there is a real need for the sector to understand that it is judged by the weakest link, and unless it takes steps to remedy it, the sorts of results the noble Baroness talked about will occur.
Secondly, there is a failure to see that the alphabet soup of regulatory bodies—the IoF, FRSB, the PFRA and the Charity Retail Association—is confusing to the public. They often appear to be acting quite separately; the FRSB’s report on Mrs Cooke said:
“Fundamentally, the FRSB Board believes that the IOF Code must be strengthened”,
as if they are completely separate organisations, way away from each other. It seems much neater to collaborate and work closely together.
There are three things that we should encourage the sector to do. The public need a single point of entry into the system—whether they wish to approach it by phone, by email or by letter—by which complaints or concerns can be addressed. All the bodies involved in charity fundraising regulation and all charities need to pool their sovereignty into a single charity self-regulating organisation, called, say, the charity fundraising authority. That would be tasked with producing national guidelines and model rules with which local authorities should comply. If they do not comply they should explain why they are not complying. They should also provide internal best practice rules for fundraising, in particular about things like passing on names of donors to other charities, because the Olive Cooke case was about the pressure built up by repeated approaches from charities. The Government need to oversee this, either directly or through the Charity Commission.
This will be a challenge to the sector, which has not found it easy to accept change and responsibility for one another. I accept and agree that the situation is not satisfactory and action needs to be taken, but I wish good luck to whoever takes it on and suggest that they pack a tin hat.
Baroness Hayter of Kentish Town
I thank the Minister, the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson. Before I respond—I hope I will take only a couple of moments—I have a particular view that some of this forgets who are the people affected. They tend to be vulnerable. It is not just charities that treat them that way. I shall very briefly tell the Committee something that happened over the weekend. I have an aunt and an uncle aged 91 and 93. My uncle’s Alzheimer’s is quite bad, and seven weeks ago he had to move into a home. Two weeks after that, my aunt, who is 91, had a very bad stroke. The NHS was completely brilliant, and she is back home. They are highly vulnerable people. This is not a story about a charity. It is about Barclays Bank, which on Saturday wrote to them informing them that it was going to close their account. It had failed to contact them—actually it had not tried—and was going to close their account. It said that,
“we will not be prepared to offer you any new banking services”,
and would not give them a reference for any other bank. If a body such as Barclays, which is regulated by the FCA, can so mistreat elderly people, my concern is that it is not just charities that are affecting them. The vulnerable are getting this from everywhere. Therefore the standards have to be particularly high. They are not for you and me. I have talked to lots of people around the House since we raised this, and they have said, “I’ve cancelled my standing order. I just can’t do those phone calls any more”. We are robust enough to cancel standing orders, to say boo, or in this case to get on to Barclays, which is emailing me at this moment saying “Please don’t mention our name”, “We promise we’ll put it right shortly” and “We didn’t really mean to send the letter”. It is outrageous behaviour. Like the charitable stuff, it is particularly the vulnerable who we need to protect. I think the only difference between us is whether we are in the last chance saloon. My view is that we are already there, and we need to get out and do something about it. I think what the noble Lord, Lord Hodgson, said was actually close to me, although he may not have thought that. By saying that there should be a single point of entry and that the Government should oversee the process either directly or via the Charity Commission—if I have got his words down correctly—that is one stage further on than the last chance saloon. Perhaps he and I should get an amendment together for Report because we really need that extra little bit now.
Lord Hodgson of Astley Abbotts
The danger about moving as the noble Baroness says is that when in two years from now there is a charge from the Government for regulating the sector, there will be an enormous outcry, so what looks attractive to begin with will be inflexible, expensive and even more unpopular than the present system. It would be better from every point of view, accepting all the points about vulnerable people, if the sector could be persuaded to take up the challenge, find the will, find the money and make it happen, because it will make it happen in an effective way. The problem at the moment is that it has not really accepted that there is a fundamental problem and thinks that if there is a problem, it is not its problem but somebody else’s.
Baroness Barker
My Lords, I would like to follow that up by saying that I think that the noble Baroness, Lady Hayter, is absolutely right that one of the big issues—in this field in particular, but it is a big issue right across our society that we have not got to grips with—is how we will include people with dementia in all sorts of aspects of our life. This is true in terms of the NHS, and social care, and here.
The voluntary sector ought to be the one place in our society where we can go and talk to the Alzheimer’s Society and ask what a proper code of conduct and practice might look like. It is self-evident from what the noble Baroness, Lady Hayter, said, that the commercial sector has not got this right yet. Organisations such as banks are the bodies in our society that should be at the forefront of dealing with transactions with individuals, even more than government. Banks have millions of transactions every day with millions of individuals, including older people. They clearly have not got it right. We should have one go in our sector at getting it right for everybody else. If that does not work, then by all means go down the route that the noble Baroness wants to go.
Charities (Protection and Social Investment) Bill [HL]
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(8 years, 10 months ago)
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Baroness Hayter of Kentish Town
My Lords, this is in a way part of the same issue—it is about where we put responsibility. In moving Amendment 3, which relates to reporting misdemeanours, I shall speak also to Amendment 11, which concerns the power to disqualify all trustees where there has been a collective failure to protect children or, indeed, vulnerable adults, as the amendment should have said. They are not mentioned in the current wording, but I will come on to that.
The Charity Commission’s guidelines on reporting serious incidents list—I shall keep to the order used—significant items to report. They include loss of money, damage to property and, only thirdly, harm to beneficiaries. The examples given have the same order of priority. They start with fraud and theft, go on to a large donation from an unverified source linked to terrorism, a disqualified person acting as a trustee, then not having a policy to safeguard your charity’s vulnerable beneficiaries, not having vetting procedures to check prospective trustees, and, only lastly, suspicions, allegations or, indeed, incidents of abuse of vulnerable beneficiaries. That order does not seem to give great confidence that beneficiaries rank very highly.
In the same guidance, the commission warns that if trustees fail to report a serious incident, the commission “may”, not “must”, consider this mismanagement and take regulatory action. Therefore, it is possible that trustees could have failed to record an incident of abuse of a vulnerable beneficiary and still no regulatory action would be taken. So not only does abuse of vulnerable beneficiaries rank below big donations or theft but failure to report is only possible evidence of mismanagement.
We should compare that with the duty on auditors, which, again, relates to money rather than to beneficiaries. The Charities Act 2011 places a duty on auditors to report matters of material significance to the Charity Commission, so there is a higher requirement on auditors for anything relating to money than there is on trustees for abuse of beneficiaries.
For that reason, amendments are needed both to make reporting mandatory and also, where there has been a collective failure of a board to identify, report or deal with serious allegations or incidents, to enable—not force—the Charity Commission to replace the whole group. At present, the Charity Commission would have to seek to disqualify each trustee one by one, probably showing evidence of individual responsibility, whereas if on the watch of a whole group of trustees things were seriously amiss and there had been a collective failure, the amendments would enable them to be removed as a collective so that the charity could move forward in the interests of its beneficiaries.
Although, as has already been pointed out by the noble Baroness, Lady Barker, Amendment 11 deals with a failure of trustees to protect children, we also have in mind other vulnerable beneficiaries, including older people who may be at risk of elder abuse. Perhaps I may cite some examples of why we think that these two amendments are necessary and important. We know of cases in more than one charity where incidents of abuse of children were not reported as serious incidents by trustees. That shows that the general duty is not strong enough and not sufficient. We also know that trustees who may not be expert in child abuse and safeguarding work very much at the behest of the staff, who may have little more than cursory training in safeguarding.
This is particularly the case in trusts which do not concentrate on children. The Charity Commission may be notified by relatives of children that major incidents are not being taken seriously by the charity and the trustees. However, in one such case the families were advised by a government department that the Charity Commission was the only party able to address the failings of trustees to protect children. In that case the Charity Commission disagreed, feeling that it did not have the powers to intervene. It could only trigger the beginning of an inquiry. It appears that it lacks the power either to remove the trustee board as a whole, because it can do it only one by one, or indeed to appoint a new trustee with relevant experience to assist the board with the complex area of child protection.
This need for a power to remove all trustees also arises from the case of an institution where there were several instances of child-to-child abuse. An investigation by families and their lawyers showed that the staff had failed to appreciate the cumulative danger facing children, and they therefore failed to report. The fact of repeated sexual injuries involving different children over time should have led the trustees to ask some very challenging questions of the child protection officer there, as well as of the management, but they failed to do so. In that case the charity finally had to close. However, had the Charity Commission had the power to act in the way that we are proposing and been able to remove several trustees simultaneously, the closure might not have been necessary. Without the scope for agile action, matters can drag on, further damaging not only the children concerned but the charity’s reputation and, ultimately, its future. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, I was slightly surprised to see that the noble and learned Lord, Lord Hope of Craighead, was not going to rise to his feet to take us through the significant words “any serious incident”, as serious incidents obviously can be in the eye of the beholder, the second point,
“results in, or risks causing”,
which requires one to take a view of the future, which is also quite demanding, and the definition applied to “significant harm”. I wonder about the wording of this amendment, which I think would have a pretty chilling effect on trustees and might well lead to them ringing the Charity Commission with inquiries about the nature of particular incidents and whether they qualified under this quite broadly drawn clause, or indeed might lead to a rash of reports to the Charity Commission, which may or may not be a good use of the commission’s time and energy to follow up.
For my part, I go back to my wish to expect trustees to behave responsibly and for the Charity Commission to check them, but not to impose other and further duties. I drew a different conclusion from the noble Baroness about the Charity Commission’s guidance on its website, which seems to be a much better way of dealing with this than putting it into statute. The charity’s trustees would have to be aware of that guidance and follow it. I think that the noble Baroness was slightly unfair to the commission about the order in which it has rated the different offences. Just because child abuse comes a bit further down the list does not mean that it is considered less important; I do not think that is a fair conclusion to draw. It is more important that we should have flexible guidance and that the Charity Commission empower trustees. We should not impose in statute quite wide-ranging and imprecise duties that will be a further reason why people do not want to act as a trustee.
Baroness Hayter of Kentish Town
I thank the Minister, particularly on that second point. The reassurance that action for collective failure can be taken answers the point we were seeking to make.
On reporting, I have greater concerns. In answer to the noble and learned Lord, Lord Scott, we know of schools where abuse that was taking place was not being reported. Clearly, the recommendations and guidelines for reporting are not being followed. This is the problem. You have an educational establishment where abuse is going on and it is not being reported. It is that failure to report which gives rise to concern.
The noble Lord, Lord Hodgson said that we expect trustees to behave responsibly. Of course—but this issue is where they do not. I have now heard the phrase “red tape” used twice and I jib slightly every time I hear “red tape bandwagon”. It is not red tape. We are talking about protecting vulnerable people.
Lord Hodgson of Astley Abbotts
The noble Baroness has used the word “complacent”. She has used the phrase “red tape”. Nobody is in any way complacent about the importance of protecting children. The question is how do we do it effectively and are we getting the right answers to make it happen, or is it coming at a cost that is out of all proportion? One can argue that there is no cost too high, but the reality is that we have to have a system that ensures we get the proportionate, right result. Is this system going to be perfect? I have never said that it would be, but we need not be complacent about it. What we are trying to do is to give trustees the confidence to decide what is best for their charity, rather than saying, “Here is all this wraparound that you have to look at”, which terrifies them and means that people do not become trustees at all.
Baroness Hayter of Kentish Town
The noble Lord is absolutely right. Are we doing it properly? Representatives of abused people are coming to me, saying, “No, it is not working right”. That is the difference between us. We are hearing that there is a failure at present. There has to be a balance. The noble Lord is saying, “No, we have it about right”. The people representing the families of abused children where something did not happen are saying, “No, it is not right”. This is a charity Bill. If they are correct that it is not working properly, this is our opportunity to make it better. This is what we are seeking to do.
The order of the guidelines may be historical, but the issue is that, sadly, we know far more about sex abuse than we used to. It is probably already going on. It happened to my aunt when she was a child—she would be 109 if she was alive. This is not new, but we know more about it. Sadly, we know that it is far more common than we think. We are trying to do something to make reporting and awareness of it better. The only difference between us is that we are hearing from the charities concerned that the policies and the reporting requirements do not seem to be working. We are trying to get it right.
I, of course, defer to the noble and learned Lord, Lord Hope, about whether the phrasing should be “direct beneficiaries” or,
“who are within the objects of the charity”.
We were trying to say,
“those people for whom they provide a service”.
I am not going to try to draft, but we are talking about establishments that provide a service for a group of people where there is some sort of abuse going on and they fail to notice it. It is well hidden; people do not come along in dirty macs to abuse children. Either trustees really do not know because they do not have the qualifications, or they are not dealing with it properly and are not reporting it. We are trying to lift the bar.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(10 years, 5 months ago)
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Baroness Hayter of Kentish Town
My Lords, in supporting Amendments 88 and 90, which stand in the name of my noble friend Lord Campbell-Savours, I will speak in particular to Amendments 107 and 108, which are in my name and that of my noble friend Lady Royall.
The four amendments comprise the framework that would enable the register to be more than just a limp piece of paper. Taken together, they provide that if someone on the register breaches the code of conduct or the Bribery Act, or is found unfit to be registered as a lobbyist—for example, if they have brought Parliament into disrepute—the registrar would have the power either to remove them from the register or to impose an appropriate civil penalty. That is perhaps rather closer to what was suggested earlier by the noble Lord, Lord Hodgson of Astley Abbots, which is what happens under what is now the Financial Conduct Authority’s list of recognised people. So this is an important combination of amendments.
Of course, we agree that someone should have the right of appeal to a tribunal, as with any such threat to the removal of one’s profession and employment. As the noble and learned Lord said, there is already a well established tribunal that deals with appeals from the pensions regulator and other similar bodies.
Lord Hodgson of Astley Abbotts
Perhaps I may ask a question about the amendment. Is there some special significance to the word “breached”, as opposed to,
“convicted of an offence under”,
or is that just the drafting of the amendment?
Baroness Hayter of Kentish Town
I think that it is to cover breach of the code. The criminal term would not be appropriate for that. If the Government accept the amendments, I would be more than happy to accept any final tweaks, but the wording is designed to cover non-criminal matters such as breaches of the code of conduct.
In recognising and supporting the amendment dealing with an appeal, that is symbolic of our intention that lobbyists, like financial advisers, pension trustees, lawyers or accountants, should aspire to being members of a profession, with all the obligations of maintaining standards.
We know that the vast majority of lobbyists agree with that objective. They want their profession to be valued and acknowledged and therefore want us to ensure that anyone misleading the registrar or breaching the code should have no place on an approved register. We hope that the Government accept the intention behind the amendments and will respond accordingly. If not, we fear that there will be no mechanism other than sanctions for late filing to keep the register of lobbyists to a high standard.
Financial Services Bill
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(11 years, 5 months ago)
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Baroness Hayter of Kentish Town
My Lords, my noble friends Lord Mitchell, Lord Peston, Lord Barnett and Lord Davies of Oldham have all had the opportunity to thank the Minister today for hearing their arguments and meeting them. Perhaps it is now time for the Minister to do the same for one of his own side, and accept these arguments from his noble friend Lord Flight. The noble Lord, Lord Flight, is right on this: consumers will only be able to drive competition if they can swiftly, easily and cheaply change bank accounts. Without that, there really will be no way to drive up standards.
It was interesting to hear the noble Viscount, Lord Trenchard, talk about phone calls and automatic voice recognition. It reminds me of a wonderful publication produced by the National Consumer Council called The Stupid Company. This asked a whole lot of consumers, not just in financial services, “What are the things you most hate about companies?” In the top three was automatic voice recognition. It was really interesting that when that was played back to companies, they continued to use it although they knew that it was the thing their consumers most hated. Banks are like that. Until people can change banks easily, I fear that they will continue to do things that none of us likes. I hope very much, therefore, that the Minister can send Lord Flight home happy this evening by having accepted his amendment.
Lord Hodgson of Astley Abbotts
The noble Baroness leapt to her feet very quickly. I know that the House is like a horse running for the stables, and I will not detain the House long. I support my noble friend’s amendment. As regards money-laundering and transferability, I would like to pick up a point made by the noble Lord, Lord Newby, in replying to the debate on 24 October, when he talked about the transferability of direct debits and how that works as regards the Payments Council initiative.
I am afraid that this again involves the charity sector. There is general agreement that there are far too many charities and that many ought to be closed down. There are many thousands of shell charities, which are the result of mergers. There has been a perfectly proper merger and there was no problem as the Charity Commission, the trustees and the lawyers were all happy with it. However, when you ask why this shell charity remains, it is because the banks will not accept the transfer of standing orders and direct debits to the new, enlarged charity. The charity then has to go through the process of asking every single direct debit and standing order signatory to re-sign. Administratively, that is an extremely complicated process and many of course decline to do so.
I am not asking my noble friend to reply tonight but I say this in the hope—it is probably a forlorn hope—that the Payments Council is listening to this debate and might therefore see whether it can find some way to enable this administrative inefficiency to be dealt with. That would enable some of these shell charities, which no longer need to exist and exist only to collect direct debits and standing orders, somehow to be subsumed into the new charity of which they are now a part.
Financial Services Bill
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(11 years, 5 months ago)
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Lord Hodgson of Astley Abbotts
My Lords, I wonder if my noble friend could deal with one aspect of his explanation of government Amendment 94A. It may be that I misunderstood what he said. Is this to be a general removal of power—that is, a backstop—or is it going to be available in individual cases? It is not clear from his explanation whether it will be gone for ever or if an individual case could say to the Treasury, “We are going to be unfairly treated. Please step in”. At the moment, the former is a very blunt instrument and a lot of eggs could be broken before you get back to a more satisfactory situation if you felt that the regulator was using the power unwisely, unfairly and disproportionately. Could he explain the point when he comes to wind up the debate?
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for introducing these amendments and I hope I am right in understanding that the backstop power is for the whole thing and not for individual cases. I see that the Minister is nodding in agreement that I have the interpretation right. I thank him for that now being an affirmative order if it was to be changed. I am confident that the public interest will not bring it back to this House, so I am quite relaxed about it.
The other amendments aside from the first one relating to the backstop power are about ensuring some independence on the issue of warning notices, or in the case of Amendment 97ZA in the name of my noble friend Lord Eatwell and myself, on the whole disciplinary process. This amendment would ensure that a properly constituted and independent determinations panel would be responsible for dealing with all cases presented by the FCA or indeed by the PRA. As I explained in Committee, that is in effect the procedure introduced for the Pensions Regulator in 2004. It is seen as robust and independent, and it has indeed turned down some of the cases that have been taken to it. I would have to say, of course, since I was a member of it, that it was effective. It has been a useful way of ensuring that there is confidence that when cases are brought by staff, they are well scrutinised.
As the Minister has said, the government amendments in this group other than the first one on the backstop go some way to answering our concerns. However, I do not think that they go quite far enough, although I guess that we should be grateful for some movement. They introduce a degree of independence to the consideration of a case brought by FCA or PRA staff, but they fail to ensure the continuance of the RDC to give its statutory backing. We hear what the Minister says about the statement of the current FSA on what the future FCA will voluntarily choose to do, but I hope that the Government do not at some point in the future rue the day that they failed to protect the RDC’s existence and independence. For the moment, however, perhaps the noble Lord could confirm the Government’s commitment, not just that of the FCA, to the continuance of the RDC.
Financial Services Bill
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(11 years, 6 months ago)
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Lord Hodgson of Astley Abbotts
My Lords, I rise to support the amendments of my noble friend. In Committee, I said I believe that the regulatory philosophy, culture and approach has shifted and that far from it being an attempt by both sides to achieve the best and right way forward it has become an entirely aggressive, uncontrolled approach by the regulator without any thought to the consequences of how his actions will impact on the firm in question or the City as a whole.
I have also spoken about the increasing use of Section 166; the way that the significant influence function committee has used its powers to damage people’s careers and leave them absolutely no redress at all. They are left in limbo. My noble friend says that people can go for judicial review, but if he believes an individual is going to take on a regulator in this way, he cannot be doing anything other than reading the Treasury briefing note. I cannot believe, with his experience of the City, that he really believes an individual is going to be able to take on an organisation like the FCA, or the FSA as it now is, with its limitless resources, limitless amount of time and limitless access to legal expertise. I believe my noble friend raises a very serious point.
I understand the argument about transparency and it is an attractive one but the fact of the matter is we may be having transparency about inaccurate or wrong information. That cannot be sensible. We owe it to all sides for transparency to be about things that are correct in every sense. When a regulator, with all its authority, is able to put out its view it means that the person about whom the allegations are made never has a chance to obtain proper redress. In the eyes of the public there is no smoke without fire, people will say there must be something or the regulator would not have put the information out there. Even if it is proven in the end to be absolutely wrong, and even if it has not gone bust in the meantime, the firm will be immensely damaged. People will say that there must have been a case to answer because such a great authority, which has all the power of the state behind it, would not put out a notice without a reason.
I really feel that we have to be much clearer about who makes the final call about whether to publish. Judging from the Bill, it seems to me that it is far too cosy and far too easy for the regulator to be making these decisions to publish. There are not nearly enough outside checks and balances to ensure that a proper assessment of the information and evidence is made available and assessed before a very precipitous, potentially exceptionally damaging disclosure is made. I hope the Minister will be able to go a long way to meet my noble friend’s amendments.
Baroness Hayter of Kentish Town
My Lords, the starting point for my intervention on this group of amendments is our belief that consumers will benefit from transparency, contrary to the suggestions made by the noble Lords, Lord Deben and Lord Hodgson of Astley Abbotts, to help them make—
Lord Hodgson of Astley Abbotts
I do not think my noble friend Lord Deben and I said that we were against transparency. We said—or, at least, I said and I think my noble friend Lord Deben said—that we wanted to make sure that what was made transparent was accurate. Inaccurate transparency does not help anyone.
Baroness Hayter of Kentish Town
The assumption is—it has been said a number of times—“What if it is proved wrong?”. However, many, if not most, of these will be proved right, and that transparency surely will be of enormous benefit to consumers and investors in a way that I hope to demonstrate.
Financial Services Bill
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(11 years, 9 months ago)
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Lord Hodgson of Astley Abbotts
My Lords, I very much support the amendment, as I said when speaking to my noble friend’s amendment a few minutes ago. There is a real danger of failing to distinguish between risk and fraud. They get intermingled in the public’s mind. Clearly, fraud is absolutely unacceptable and needs to be chased down and prosecuted with all possible vigour. Too often, in this compensation-culture era, a risk that goes wrong is seen as fraud: “I should not have lost money”. One difficulty with the interesting concept, proposed by the noble Lord, of duty of care is that although you can explain very clearly to people the risks that they are taking, when it does not happen as you and they hope—things are volatile—they are inclined to forget that they were given the appropriate warnings. Our emphasis must be on making sure that risk is understood; and that fraud is unacceptable; but that the two are completely distinct. There is a confluence in the public mind, sometimes encouraged by the way that the newspapers report it, of two issues. There are plenty of cases where fraud has happened—that is wrong—but there are also cases where people have taken risks which they anticipated would deliver them huge returns. When they did not, because they were highly risky, they did not see themselves in any way responsible; they sought someone else to blame.
Baroness Hayter of Kentish Town
My Lords, I was particularly grateful to hear the words of the noble Lord, Lord May of Oxford. We will shortly come to a specific amendment about a duty of care. I hope that he will be here to repeat his words in 20 minutes or whenever we reach the amendment. I also hope that the Minister can pick up a briefing note that says “support”. His face tells me possibly not.
At Second Reading, I talked about caveat emptor, not having realised that it is no longer the accepted term. I have concerns about it because it is rarely used as an excuse for ordinary consumers to say, “Oh, I lost money”; it is far more used by producers to say, “Well, we told you so”, even if it was, as the noble Lord, Lord Hodgson, said on an earlier amendment, on page 4 of small typed script of something that had been sent to them. I remain of the view that responsibility for ensuring that consumers know what they are buying rests with the provider by producing intelligible and appropriate information. We will turn to the issue of duty of care shortly.
The Joint Committee on the Bill wrote that, should it be essential for the FCA to have regard to the behaviour of consumers, the FCA duty should be amended as set out in Amendment 105, in my name and that of my noble friend Lord Eatwell. As the Joint Committee stated,
“provision of information alone will not significantly improve consumers’ ability to make well-informed decisions. The information needs to be easily understandable and accessible”.
There is widespread suspicion that many purveyors of financial products deliberately try to keep certain customers in the dark. That confusion can mean that some, blinded by graphs and numbers, sign up to a product and later down the track find themselves caught by certain clauses and conditions of which they had, sadly, been unaware.
An issue just as difficult, of course, is the ability to compare prices and thus to shop around—an essential element of the much-vaunted caveat emptor, or competition, on which the Government rely to improve services. Martin Wheatley, the chief executive-designate of the FCA, has described the difficulty for consumers in comparing products such as bank accounts, which are structured in a way that makes it really difficult to establish whether the product is good value. We all know of practitioners who talk in terms so remote from the common-sense understanding of contractual agreements that people are unaware of what they are signing up to. This was undoubtedly the case with the recent interest rate swaps.
Asked whether firms had a duty to go beyond their legal responsibility to consumers, Mark Hoban MP said in another place:
“It is in the interests of firms to ensure that consumers do understand the products that they are buying because it then minimises the risk of problems further down the track”.
Although I agree with those sentiments, that answer seems to be about not having to pay redress later, rather than trying to prevent the mischief in the first place. Unless we do something to reduce such occurrences—today we have already mentioned PPI, personal pensions and mortgage endowments—we will have learnt nothing from what has gone wrong.
However, as the amendment moved by my noble friend Lord Peston makes clear, it is not simply language—the “crystal mark” of plain English—that is important. This is about explaining the risk to which the consumer is signing up, or for which they are paying money so that someone else takes that risk in exchange for the payment. So they might buy a product that covers the risk of inflation but does not cover longevity, or vice versa. Or a product might cover their life expectancy but not that of their surviving spouse. The permutations are endless. What is key is that, in addition to the language being clear, the limits of the product should be clear so that—in the famous words—there are “no surprises”. If I buy a bottle of Coke I will know its size, volume, sell-by date and taste. Regulation has sorted out much of that. We need to give this regulator the ability to expect no less from the providers of services which they are selling to largely unsuspecting customers.
In the other place, the Minister said:
“The Government recognise that there can be significant information and capability asymmetries between firms and consumers”,
and that poor “provision of information” could be a key factor in,
“a consumer ending up with an unsuitable product”.
He therefore fully supported,
“the intention behind the amendments”—[Official Report, Commons, Financial Services Bill Committee, 1/3/12; col. 261]—
in the other place, and therefore the intention behind the amendment that is in my name in this group. I hope that the Minister will now go further than his colleague in the other place, who accepted only the intention behind the amendments, and that he will accept the amendments as they stand. If it would make him feel better, perhaps he could agree to the intention now and bring back a suitably worded amendment on Report.
Financial Services Bill
Debate between Baroness Hayter of Kentish Town and Lord Hodgson of Astley Abbotts(11 years, 9 months ago)
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Lord Hodgson of Astley Abbotts
My Lords, I support Amendment 101A in the name of my noble friend Lord Flight about the importance of maintaining the competitive position and that that needs to be uppermost in our minds. But I am also attracted by Amendment 139A which has drawn in the regulatory principles that are to be followed by both regulators. It seems to me that here we will be starting to set the culture. It is the culture of the regulator that will have such an important impact on the way our financial services develop and the way the people who work in them behave. As my noble friend Lady Noakes said, it is important not just to see this through the prism of City eyes but to realise that there are a wide range of financial services in Edinburgh and the provinces of this country which require the appropriate regulatory framework.
Competition, by its nature, introduces novelty—novelty being something that the regulators tend to fear. It carries risk, but of course what is old and familiar is much easier to deal with. In a way, that is liked. But, particularly when established firms tend to draw attention to the risks of novelty, the regulator tends to back down. I am not suggesting that we should not take risks. We need to be risk aware but we must not be risk averse. There is a danger that in the pendulum within the Financial Services Authority and, no doubt, driven by the criticism that it has faced, we have gone to the end of the risk-averse scale. There is a great deal we still need to do in this Bill to provide the right framework and culture. I shall look forward to returning to this in amendments to which we will come shortly. For the time being, I am delighted to support my noble friends’ two amendments.
Baroness Hayter of Kentish Town
My Lords, this side of the House has already acknowledged the role of competition in serving the consumer. Indeed, we could do with rather more of it in the retail banking sector. A rather more creative vision of competition could address some of our concerns in that regard. For example, Age UK has suggested shared branches which offer a perfectly competitive environment, ease of comparison, and switching from one customer to another within the same location. We are wholly in favour of a competitive environment for the benefit of consumers.
That being so, I obviously support most of the amendments in this group. However, I ask the noble Lord, Lord Flight, why the first amendment is needed, given that it seems to put competition as a brake on the FCA. I worry what the driver is behind this. I hope it is not to protect bankers’ bonuses, given there are still some in the City who seem to believe that high wages and bonuses are a vital aspect of what makes the UK competitive in this sector. I would instead call on the coalition programme, which says the Government will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector. Amen to that, although I am rather sad that—I think it is today—the Chancellor of the Exchequer is in Brussels voting against such an amendment.
Or is the amendment drafted because there is a feeling that regulation is too burdensome? I hope it is not for that reason, but the Prime Minister has form in this regard. In 2008, he said he thought that the problem of the past decade was too much regulation. The current Chancellor also said, in 2006, that financial regulation was,
“burdensome, complex and makes cross-border market penetration more difficult … and it threatens the global competitiveness of the City of London”.
I hope that the Prime Minister and the Chancellor of the Exchequer are now grown up enough to accept that it was too little rather than too much regulation from which we suffered.
I hope it is not—maybe we can get some assurance on this—the idea that international competitiveness should trump consumer protection. The noble Baroness, Lady Noakes, was much more concerned about the wholesale market. I think she will also understand the concern of consumers that this might trump the consumer protection aspects. Although we very much want this to be an internationally competitive industry, we do not want it at any price. We do not want a race to the bottom for moving wherever regulation is cheapest or less obvious.
In respect of Amendment 104A in the name of the noble Baroness, Lady Noakes, I know that Martin Wheatley, the CEO designate of the FCA, is very unkeen to have this duty. He does not think that in its intervention it is the function of a regulator to have to have regard to that as well as to consumer protection, and is concerned that it would create a set of conflicts. He said that,
“to have a specific UK competitiveness competition point can only lead to compromises in regulation”.
Perhaps the Minister can indicate whether the Government have the same concerns. Perhaps the “no regard” comment of the noble Baroness, Lady Noakes, is a better way of describing this, rather than making it trump some of the other aspects. I imagine the Minister will say something similar, because I know the Government, in responding to the Treasury Select Committee on this issue, while recognising the importance of a competitive sector, do not feel that these words would add much to the Bill.
Amendment 129 in the name of the noble Lord, Lord Flight, is rather easier. It requires the PRA to consider the desirability of promoting the UK’s competitive position within financial services. We have no argument with that. London First I know is particularly supportive of this, stressing also the stability of regulation in financial services, which means no more change after this.
Amendment 110 in the name of my noble friend Lord McFall refines the FCA’s objective so that the integrity of the UK’s financial system includes the confidence that it generates within the UK, as well as in foreign financial markets. This would encompass consumer confidence, which would clearly be vital in rebuilding trust in savings and investment, so we are happy to support this amendment.
Finally, Amendment 139A in the names of the noble Baroness, Lady Noakes, and my noble friends Lord McFall and Lady Cohen of Pimlico provides that the objectives of both the PRA and the FCA should include consideration of the capacity of the sector to contribute to the UK’s economic growth, also supported by the CBI. As the coalition programme said:
“We want the banking system to serve business, not the other way round. We will bring forward detailed proposals to … create a more competitive banking industry”.
I am pleased to say that this is one element of the coalition programme that, again, we are very happy to endorse. Given that, sadly, growth continues to flatline under this Government, if ever there was a time to ensure that these new and powerful institutions focused on job creation, this surely is it, and we happily support that.