Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019

Baroness Janke Excerpts

Wednesday 1st May 2019 Lords Chamber

[Baroness Janke (LD)]

My Lords, I did not participate in this Bill but I share the sentiments expressed so far about the need for financial guidance, advice and education to help people come to better decisions. I support the remarks of the noble Baroness, Lady Neville-Rolfe, about the importance of including this as a regular part of the curriculum. As a teacher, I have spent some time trying to teach basic financial skills as part of personal and social education, but it is very difficult when there is not proper time allowed for this in the curriculum. I agree that it needs to be given much greater importance. That is even truer now when so many young people have easy access to the internet and easily become fair game to scams, complex bogus schemes and systems of advice which are really there to deceive and take their money. Therefore, I broadly welcome the scheme.

I was interested to hear the remarks of the noble Lord, Lord Stevenson, about debt and debt management and the importance of the latter not just to the economy but to individuals who may be going through a particularly dreadful period in their lives.

As I said, I did not work on the Bill, but I wanted to ask a few things about the Act’s progress. Section 3(7)(b)(i) commits the Minister to publishing,

“an assessment of whether unsolicited direct marketing is, or may be, having a detrimental effect on consumers”.

Has any analysis of that been done yet? If not, could something to do with the quality of advice and the qualification of some of the advisers be included in that? I do not know whether there was debate on that during the passage of the Bill. Section 4(1) says that the single financial guidance body must provide advice to a member of a pension scheme or an inheritor on what to do with the flexible benefits. Are there any early thoughts or a timetable on that?

I know that with regard to Section 22 there was an issue about whether the Government would limit or control the direct marketing of financial services. Again, has any progress been made on that? If not, is there a timeframe in view? My observation—I speak as a counsellor who has given advice on debt and other topics—is that the question of resources is very important. As part of the programme of austerity, financial and legal advice were two of the areas that were severely cut back. I would welcome assurance that the finance for this will be protected, as has previously been mentioned.

I also wonder about declarations of interest and vested interests. How can customers know whether their advisers have these, and what they are? We talked about lists online about people taking advice. There may be a provision already about who is registered to give advice.

There is also the issue of redress. The legislation talks about the FCA, but my experience is that redress can be very difficult for people who are not knowledgeable about these things. It can be very long and very inaccessible. I hope the Minister can enlighten me on that. Having said that, this seems a very good measure and I look forward to hearing more as the measures in the Act are introduced.

[The Archbishop of York]

My Lords, I want to support the main thrust of the speech from the noble Lord, Lord Stevenson, about debt. Julia Unwin, who was chief executive of the Joseph Rowntree Foundation, did a big research project on why people were going to Wonga. They went to Wonga because it asked no questions; people knew they could get their payday loan. Other lenders asked more questions and were far more intrusive and credit was not readily available. Noble Lords know that my archiepiscopal colleague, the most reverend Primate the Archbishop of Canterbury, said that he intended not only to reform Wonga but to do away with it, and we know what has happened to Wonga.

Credit unions have been set up, which the most reverend Primate and I support. However, people still find it hard to get credit easily and the organisations responsible have caused a lot of people to go deeper and deeper into debt. When he was Archbishop of Canterbury, William Temple suggested that interest rates should be set only by the Bank of England, and not by credit companies, because the Bank of England is accountable to Parliament, which can ask it questions. Noble Lords know what happened with subprime mortgages, with debt being put into little parcels and sent all over the globe until eventually there was no money anywhere. We all know what happened in 2008 with the credit crunch, which was caused purely by excessive debt.

I welcome the Financial Guidance and Claims Act 2018. The noble Baroness, Lady Neville-Rolfe, is right that education about the dangers of debt should start at a young age. Nevertheless, in the meantime, is there a way for those who genuinely find themselves in real trouble to get support and help in a similar way to how food banks work? A lot of people have found that their money is sometimes not enough to meet their needs and so they have gone to food banks. The good thing about food banks is that they do not give food all the time. People know when to collect it and when they last collected it. This has become a marvellous way of taking people out of great debt.

Will the issues raised in the Financial Guidance and Claims Act 2018 and by the noble Lord, Lord Stevenson, be taken seriously by all of us and particularly by the Government? It is their responsibility to provide the guidance required to ensure that Wonga—this payday lending stuff—will not be resurrected and that the people who genuinely need credit can get it in a sensible way. I am very glad that the Government are trying to say that we should be responsible citizens, not only for pensions but for the whole question of social care, with people beginning to put a little money aside for their social care.

It sounds a bit simplistic, but could we not create some sort of food bank-type arrangement? This would help ensure that people on low incomes do not find themselves borrowing from places that will demand more and more money. Noble Lords know what happened with people being given interest; banks also behaved very badly. In a wonderful economy such as this, could some thought be given to ensure that those who are really up against it do not get into greater and greater debt? They may find that their houses are repossessed or their goods taken away and this again throws them back to bad lenders. They find themselves in a cycle of bad debt, which goes through the family for years. If I took your Lordships around Middlesbrough, you would realise that unless you actually tackle debt, some children are condemned to it and, even if we educate them properly, this will not bite.