Financial Guidance and Claims Bill [Lords]

Debate between Gareth Thomas and Julian Knight

3rd reading: House of Commons & Report: 3rd sitting: House of Commons
Tuesday 24th April 2018 Commons Chamber

[Gareth Thomas]

My hon. Friend makes a good point.

In the United States, federal banking regulators regularly assess how banks are meeting local credit needs. Their assessments affect the way in which the banks are allowed to expand, merge, do acquisitions and so on. Banks can get credits towards their assessments if they invest in community banks or credit unions. Not surprisingly, both the community banking movement and the credit union movement are in even better health in the US than they are here.

Santander, HSBC and Barclays all operate in the United States, where they release far more data on lending, down to postcode level, than they do here. So surely the questions for this House are: why are they not willing to do that here, too; and, as I believe, should they be forced to do so? Last October, Santander announced an $11 billion, five-year settlement on lending and community development in eastern parts of the United States, which is the market in which it operates. That represented a 50% increase in its Community Reinvestment Act-related activity. No such equivalent increase has been announced here in the UK. The Community Reinvestment Act has cross-party support in the US, being backed by Republicans and Democrats alike, including for its data disclosure requirements. If Ministers are not prepared to accept my amendments, I would wish, with your permission, Madam Deputy Speaker, to press amendment 1 to a Division. These amendments are not onerous. Banks and other lenders record this data, and although a little work would be needed so that the information could be released in a useful format, a similar system works particularly well in the United States. In turn, the disclosure of lending details could help the single financial guidance body to make more effective choices.

I shall deal briefly with amendment 31. One key challenge for the single financial guidance body will be, as we all know, to help those who need loans, for whatever reason, to access the cheapest products—those offered by credit unions fall into that category. Surely the SFGB should be mapping where credit unions exist and what further action can be taken to promote the take-up of their services by those who are most in need. Credit unions have very low administration costs. They simply do not have the megabucks of a major bank or a payday lender’s marketing department, so many of those who most need the support that credit unions can offer are often unaware of the services they provide. Surely another challenge for the House is to work out how we help credit unions to make more information available about the products on offer. I know that Ministers are sympathetic to efforts to expand the credit union sector, so I ask them to give specific attention to thinking about what further steps can be taken to help the credit union movement to expand and to support the SFGB in achieving that aim.

[Julian Knight (Solihull) (Con)]

I refer Members to my entry in the Register of Members’ Financial Interests. I completely agree with what the hon. Gentleman says about credit unions. Does he agree that one key aspect of trying to promote them is improving their professionalism, IT and this information, and using the potential for workplace credit unions? Should we not try to bring this through the workplace and payroll?

[Gareth Thomas]

I agree with that point, which is why it has been encouraging over the past 10 to 15 years to see Departments beginning to do their bit to encourage the workplace take-up of credit unions. I hope the Economic Secretary may be able to tell me that Her Majesty’s Revenue and Customs will follow this trend soon, but the point about trying to increase professionalism is well made. Again, it would be good to hear commitments from Ministers that some of the problems that credit unions face due to poor regulation by the Financial Conduct Authority will be dealt with.