Financial Services and Markets Bill

Baroness Tyler of Enfield Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Baroness Tyler of Enfield (LD)]

My Lords, I refer to my registered interests as president of the Money Advice Trust and as a member of the Financial Inclusion Commission. I congratulate the noble Lord, Lord Remnant, on his excellent maiden speech.

Although I welcome the Bill overall as an opportunity to strengthen and improve the regulation of the UK’s financial services, in too many places it feels like a missed opportunity. I will focus my remarks on financial inclusion, where I feel the Bill currently falls shorts in important respects. I make no apology for this emphasis, given the huge power imbalance that exists between banks and other financial services providers, who have plenty of people to speak on their behalf, and vulnerable customers, who have far less of a voice in these debates.

As highlighted so compellingly this afternoon, the lack of focus on improving the transparency and accountability of the regulators, and on giving Parliament greater powers of scrutiny, sadly runs through the Bill like a stick of rock. I hope we will be able to redress this balance as it progresses.

The 2017 Lords Select Committee on Financial Exclusion, which I had the privilege to chair, called on the Government to set out a clear strategy for improving financial inclusion in the UK. Without such a strategy, it is simply not possible to make the progress needed to ensure that everyone can access the financial services they need at a price they can afford. The committee also recommended that the Government expand the FCA’s remit to include a statutory duty to promote financial inclusion as one of its key objectives. These key recommendations were reiterated in the 2021 follow-up Liaison Committee report. I readily acknowledge that setting up a Financial Inclusion Policy Forum in response to the Select Committee report provides welcome discussion of some of these issues, but it is no substitute for a government-led strategy, alongside a regulator that has statutory responsibility for ensuring that financial inclusion plays a part in its everyday operations.

We now have the opportunity to plug the “black hole”, as I often call it, that exists between social policy and financial regulation. We have heard time and again how consumer groups are passed between government departments and the FCA, with no one institution willing to act; and how the Treasury refuses to act on well-known issues such as the poverty premium, which we have heard about this afternoon, until enough data is collected, when the only organisation able to obtain this data is the FCA, which in turn says it is not its remit to collect such data.

The Bill provides the opportunity to plug this gap and prevent the most vulnerable falling through the cracks. By giving the FCA a cross-cutting “must have regard” to financial inclusion duty, along with a requirement to publish findings, it will have the ability and incentive to ensure that the needs of those currently denied access due to affordability issues are considered. This will allow clarity on how far market regulation can address financial exclusion and where government-instigated social policy is needed. I will bring forward amendments on this in Committee.

Turning briefly to the duty of care, another Select Committee recommendation, I concur completely with the sentiments expressed by my noble friend Lord Sharkey. A consumer duty as brought forward by the FCA is not a duty of care. The former has many exemptions and does not provide wronged consumers with the right to secure monetary redress through litigation. For accountability and parliamentary sovereignty, it is a matter of real concern that, after Parliament passed the Financial Services Act, placing a duty on the FCA to consult and bring forward rules on a duty of care, it chose not to. This Bill provides an opportunity to remedy this unsatisfactory state of affairs.

Finally, I turn briefly to access to cash. I welcome the commitment to legislate to give consumers greater protection in accessing and depositing cash. It is long overdue. Difficulties in accessing cash by the 5 million people—I know other figures have been quoted, but that is the figure I have—who still rely on it have grown hugely in recent years. The UK has lost half its bank branch network since 2015 and there has been a 25% decline in free-to-use ATMs since 2018. It is a particular problem for many of the elderly, those with certain physical disabilities and mental health conditions, and those in deprived communities who are digitally excluded and financially vulnerable. I hope to see more action in this area, including extending the FCA’s remit to consider other services that should also be protected. I would like to see the Bill guaranteeing a minimum level of free cash access services and local authorities having the right to request a review of local cash provision.