No-deal Brexit: Short Positions against the Pound

Jack Dromey Excerpts

Monday 30th September 2019 Commons Chamber

[Mr Clarke]

Would that all parts of our country were as well served as Dudley is by the hon. Gentleman, who is absolutely right: it is genuinely dispiriting that in the mother of Parliaments we find ourselves debating material that is more fit for the tinfoil hat brigade than for Parliament at a crucial time in our country’s history.

[Jack Dromey (Birmingham, Erdington) (Lab)]

As deputy general secretary of the old Transport and General Workers Union and then Unite, I led the battle against the Kraft takeover of Cadbury. A successful and profitable British icon was taken over by a debt-laden American multinational because the hedge funds bought 31% of the shares and sold Cadbury short. Does the Minister not recognise that there is a potential conflict of interest when we have a Prime Minister prepared to sell Britain short by way of a no-deal Brexit, backed by those who make billions daily out of selling our nation short?

[Mr Clarke]

The short selling regulations cover the sale of shares, so that falls within the remit of the existing legislation. Clearly, we all want to see our country thrive and move forward towards a better future. That will be best done by voting for a deal, as of course many of the members of the hon. Gentleman’s former trade union will have done.

Breathing Space Scheme

Jack Dromey Excerpts

Wednesday 19th June 2019 Commons Chamber

[John Glen]

My hon. Friend is right to draw attention to the excellent work of Christians Against Poverty, which is indeed a key stakeholder. We engage widely with the sector, including the Money and Mental Health Policy Institute, StepChange, the Money Advice Trust and the charity National Debtline—it really is a collaborative effort—and I am pleased with their response to where we have got to.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Debt ruins lives. Debt harms health. Debt damages relationship. Debt holds back children. In extreme circumstances, debt kills. When the Financial Guidance and Claims Act 2018—it established the Money and Pensions Service—was being taken through the House, the Government made a commitment to move on a breathing space scheme. Today’s announcement is therefore welcome, particularly the action being taken to defend the interests of those suffering mental ill health. In welcoming today’s announcement, I urge the Government to ensure that the new arrangements are properly resourced and that there is a sense of urgency in their implementation, because the sooner they are put in place, relieving that terrible burden that afflicts so many people in our country, the better.

[John Glen]

I am extremely grateful to the hon. Gentleman for his comments. He played a significant role in the passage of the legislation that led to today’s announcement. He urges me once again on the timeframe, and I can assure him that my Treasury officials are working as rapidly as possible, but we must also ensure that it actually works. One of the questions he asked me previously, about what is included in the scheme and the range of public sector debts, has been a significant driver in those conversations. I acknowledge and take on board his comments.

British Steel Pension Scheme: Transfers

Jack Dromey Excerpts

Wednesday 10th April 2019 Westminster Hall

[Jack Dromey (Birmingham, Erdington) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth. First, I congratulate my hon. Friend the Member for Blaenau Gwent (Nick Smith) on securing the debate. I praise my hon. Friend the Member for Aberavon (Stephen Kinnock), who has played a major role in the drive for justice for those who were cheated on their pensions, the work of the APPG and the co-operation of colleagues from the SNP. I also welcome to her first Westminster Hall debate the newly elected Member for Newport West, my hon. Friend the Member for Newport West (Ruth Jones), who will, I know, be a strong champion of the people of Newport West.

A good pension is about security and dignity in retirement. The people of Britain deserve nothing but security and dignity in retirement. People work hard, build our country and, when they come towards retirement, plan ahead for the holiday they had always dreamed of, or to help their kids to be able to buy their own home. There can be nothing more painful than to be cheated out of what they have worked for all their lives.

I sometimes say I have been around since Churchill was a boy. I remember the era back in the 1970s and 1980s, when half the population of Britain was in good final salary DB schemes. We have made some progress—for example, the battle on auto-enrolment that we fought and won when Labour was in power, and which I welcome being carried forward by this Government—but to be frank, there has been a depressing direction of travel for good final salary schemes. There have been too many scandals, but none more scandalous than that of British Steel, and that is emblematic of the problem we face with the regulation of DB pension schemes in the UK.

As my hon. Friend the Member for Blaenau Gwent stated, when a deal was struck to keep Tata afloat, members belonging to the £15 billion British Steel pension fund were given the option to shift their assured benefits to the Pension Protection Fund, to join a new retirement scheme backed by Tata, or to transfer to personal pension funds. That led to what was called a “feeding frenzy” at the site in Port Talbot, as dodgy introducers preyed on workers who were more than likely confused about the position of their pension, and who may not have had the financial support or education needed to make such an important decision. Some advice was available, but often it was simply not good enough, or it was technical and unintelligible. Those rogues, those introducers, should be utterly ashamed of themselves. They bought meals for workers in local pubs, and convinced them to transfer their pensions into totally unsuitable schemes. Some people could have lost up to six figures from their pension total.

The Financial Conduct Authority has been probing concerns that pension changes that involve 130,000 members of the Tata retirement fund appear to have been affected. A study of the 8,000 people who transferred their pension demonstrated that 58% received advice that was simply not suitable, and the Pensions Regulator calculated that in 2017, the average loss was £94,000.

I will never forget the heartbreaking story that I was told by the chief executive of the Pensions Advisory Service during the passage of the Financial Guidance and Claims Bill that introduced the Single Financial Guidance Body. The Pensions Advisory Service set up an advice facility on site, and one of the first people to come in was a big burly steelworker and shift supervisor. He sat down and burst into tears. It turned out that he had been duped by one of those introducers, and it had cost him tens of thousands of pounds. The main reason for his grief, however, was not what he had suffered and would endure for the rest of his life, but the fact that the 20 guys on his shift had all followed his lead. He said to the Pensions Advisory Service, “I’ll never, ever be able to forgive myself, because the mistake that I made has had catastrophic consequences for the people I’ve worked with for 10, 20 or 30 years”.

The British Steel case was central to our work during the Financial Guidance and Claims Bill, and I pay tribute to the work of my hon. Friends the Members for Blaenau Gwent and for Aberavon, and many other Members, particularly from Wales, who played a noble role in strengthening the legislation to crack down on the outrageous. Real progress was made. Cold calling more generally was central to the debate on the Bill, and the ban on pension cold calling was a significant step in the right direction. However, we must now go further and introduce a ban on all cold calling—there were constructive discussions about that, and it would be helpful if the Minister would update us on the Government’s thinking—and we must also ban the work of introducers. From January this year there has been an end to pension cold calling, but more needs to be done.

More generally, the introduction of the Single Financial Guidance Body is a welcome step towards greater financial education and security. It brings together the three previous bodies, which all did good work, into a new, more effective body for the next stages. Crucially, it needs to be adequately resourced, not least because of the role that it will play in the oversight of the dashboard process, but it is welcome that it has been established.

Having said that, lessons need to be learned, and significant further progress must be made. On the learning of lessons, and the need for action, the right hon. Member for Birkenhead (Frank Field), the Chair of the Work and Pensions Committee, said of the Committee’s findings earlier this year:

“British steelworkers were roundly failed by the official regulators meant to protect their life savings. They were given precious little to guide them through murky waters filled with scammers looking to snatch their pensions—scammers who had little to fear from the FCA’s grossly inadequate action at the time”,

which I think it now acknowledges. The right hon. Gentleman continued:

“Now it seems they are being sold short again on what even the FCA calls ‘rightly’ deserved compensation. The FCA has ridden to their defence and urged the FSCS to be more generous, but the FSCS is clinging to rules the FCA says needn’t apply.”

That is a powerful indictment of what happened, and a call for further action to be taken. That is essential because—I say this with some sadness—British Steel is not the only outrageous case of pension mishandling. We have seen too many other scandals, most notably BHS and Philip Green, who ought to be utterly ashamed of the way he has conducted himself over the years, and what happened with the collapse of Carillion, which I will never forget.

In my constituency, we had a first-class apprentice training centre that was operated by Carillion and that had 60 apprentices going through it at any one time. When Carillion collapsed on the Monday, they were told, “Don’t worry. You’ll be okay.” On the Tuesday, they all got called in and sent home at lunch time—a number of them in tears. One young man, who had suffered from autism but whose life had been moving forward in the right direction, was sobbing uncontrollably and saying, “What am I going to tell my mum?”

On the pensions issue, Carillion has been centre stage in our discussions, including with the Government, about the further steps that need to be taken. Some of the proposals in the DB White Paper are welcome, such as stronger criminal sanctions for directors neglecting pension schemes—although I will come on to the fact that the possibility of criminal action is there in the here and now—stronger powers for TPR, and clearer standards on scheme funding.

[Stephen Kinnock]

On the issue of further action, particularly regarding legislation, is it not vital that the Government recognise the huge risk in divesting pensions? If people are not defaulted into the new scheme that is being set up, and it is left completely open to them, there is a real risk that they will be easy prey for unscrupulous financial advisers. Should the Government not bring forward a statutory instrument that makes it the default to go into a new scheme, rather than to go into the Pension Protection Fund? That is particularly important when all the actuarial advice is that it would be best for the vast majority of those pensioners to have gone into the new scheme and that they should have just been defaulted into it. That can be done by statutory instrument.

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[Jack Dromey]

My hon. Friend makes a powerful point. In the debate over the last 12 or 18 months, we have called that the progressive default option. There is no question but that it has enormous merits and it would be helpful if the Minister were to comment on it in his response.

The experience with Carillion pointed to more general problems that started with the Government’s lamentable non-intervention. Despite the fact that the company was getting into greater and greater difficulty, and despite repeated profit warnings, they continued to let contracts to Carillion. The regulators were aware of the risks at a relatively early stage, but they did not use the full extent of their powers to avoid unnecessary burdens on business. I kid you not. I quote from what was said at the time.

The board, which failed in its duties to workers and pension scheme members, continued to pay out large salaries, bonuses and dividends, but did not pay into the pension deficit. The trustees did not alert regulators to the extent of the problems early enough. Asset managers continued voting through large pay packages despite profit warnings, and the auditors did not spot the signs of trouble early enough. There is a raft of problems associated with the scandals that have befallen too many workers in our economy. The lessons from Carillion in terms of the need for action more generally are powerful indeed.

At the next stage it is vital that the regulators act to make sure that such events never happen again. They need to become more people-focused, ensuring that workers’ pensions are protected at all costs. Rogues in the industry must be sought out and punished, ensuring that they never work in the industry again, and the law needs to be strengthened. To that end, there have been constructive discussions with the Government on presenting a Bill as soon as possible to introduce the stronger powers contained in the DB White Paper to go after rogues. Perhaps the Minister will comment on where that legislation is. It is important for two other reasons, including the introduction of the pensions dashboard—for example, the compulsion on providers to provide the necessary information to the dashboard—and the collective defined contribution pension scheme that has been agreed between Royal Mail and the Communication Workers Union.

There are welcome measures on pensions that can and should be taken where there is a degree of consensus, even if we argue that the Government should go significantly further. The sooner they are introduced into legislation, the better.

In conclusion, this is little comfort to the workers of British Steel or those in Carillion, but the tragedy that befell them was at the centre of the drive for changing and strengthening the law last year. It is at least something of a legacy, even if it is cold comfort to them. At the heart of it were MPs such as my hon. Friends the Members for Blaenau Gwent and for Aberavon, who played a major role in highlighting the scandal and demanding that action be taken.

At the next stages, I stress again that it is important that lessons are learnt by all those I have referred to and that the law is strengthened. I will finish by referring to something that my hon. Friend the Member for Blaenau Gwent said, and he was absolutely right. Is it necessary to change the law in the ways that I have argued for? Yes, without hesitation, but there are powers that exist now in criminal law, and those powers should be used. I know the workers of Port Talbot would say that those evil men and women who cheated them on their pensions need to be investigated, tracked down and put in the dock. An unmistakable message must be sent: if you rob workers of their pension scheme, you are an utter disgrace and, will end up in the dock, and, in extreme cases, in prison.

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[John Glen]

Following our meeting, I undertook to speak to Andrew Bailey, the chief executive. We are due to meet every few months, and our next meeting is imminent. I will speak to him about that. A number of live investigations are under way; I do not have investigative power myself, but I will take a close interest in those investigations. Individual companies—I will not name them—are being actively investigated now, and I expect the FCA to make announcements and recommendations consequent to those investigations imminently. I am not privy to the detail, but I am taking a close interest and will be speaking to the chief executive, because I realise that time is pressing on. This morning we have heard vivid accounts of individuals and families ruined by these decisions, and I take the matter seriously.

To get back to my script, the FCA leads on financial advice and has considerable power to act against firms and individuals who provide negligent advice. To be clear: the FCA can impose a financial penalty on a firm, require the firm to pay redress to its customers, restrict the firm’s permissions, or prohibit individuals from operating in financial services. The FCA can bring criminal prosecutions. I hear the enthusiasm for that action being taken, and I think the FCA hears it too, but it works closely with other organisations to support criminal prosecutions. Both the Government and the FCA are targeting their attention on the effective regulation of financial services and wider work to tackle scams, including the recent implementation of a ban on pensions cold calling.

[Jack Dromey]

That is helpful, but in the case of British Steel, I think it would send absolutely the right message to the workers concerned if the Minister said today that a sense of urgency is needed on the part of the FCA and the South Wales police about investigating potential criminal wrongdoing and taking action. The workers back at the plant would welcome that.

[John Glen]

I am happy to respond to that intervention by saying that it is absolutely imperative that the FCA works with all bodies to hold those individuals to account and to take the appropriate action in the light of the evidence presented to it. This is urgent; the individuals who have suffered this experience expect that of the FCA, and I believe the FCA is keenly aware of that.

The hon. Member for Blaenau Gwent talked about the regional presence of the FCA. It has more than 3,000 employees and runs an annual programme of regional supervisory workshops under its “Live and local” banner, in which it educates firms and gathers intelligence from across the country. That has included recent workshops on DB pension transfers. Although the FCA does not have a series of regional offices, there is a clear expectation on the part of the Government and the FCA itself that it will go out into communities across the country, to ensure it has a presence among the 35,000 IFAs that operate.

The regulator is also undertaking further work on the pensions transfer advice market. The FCA is analysing responses to a recent data request from firms that undertake pensions transfer advice and is planning a programme of work, which is likely to include further engagement with stakeholders, targeted education for firms involved in providing pension transfer advice, and assessment of those firms significantly involved in the provision of DB transfer advice. The FCA has already announced a requirement for all pension transfer specialists to obtain the same qualifications as fully regulated investment advisers, alongside their existing qualifications, by October 2020. In relation to the BSPS, the FCA intervened to stop 11 firms from providing pensions transfer advice, and several firms are still under investigation.

It is important to ensure that consumers are protected from poor-quality and unsuitable advice, and there are proper mechanisms for redress when they receive poor advice. The first port of call for consumers to seek compensation is to approach the firm itself. If they cannot resolve the issue, consumers can take their complaint to the Financial Ombudsman Service. The FOS is a free, independent service that provides an alternative to the courts. The maximum award it can recommend was increased at the beginning of this month from £150,000 to £350,000 per individual. If firms go into liquidation and cannot provide compensation to individuals, a second tier of protection is open through the financial services compensation scheme. The FSCS is mainly funded by an annual levy on the financial services industry. Since its founding, the FSCS has helped millions of people and paid billions of pounds in compensation.

It is important to note that in the British Steel case, only a very small minority of former steelworkers who have taken their claims through the FOS and the FSCS have not been fully compensated. That group were all clients of one firm, and the Government’s decision to make financial advice mandatory for those seeking to transfer their DB pension has therefore guaranteed a crucial layer of consumer protection to those individuals.

“Phoenixing”—firms or individuals seeking to avoid liabilities arising from poor investment advice by re-emerging as a different legal entity—can leave consumers and taxpayers out of pocket and tarnish the reputation of the industry. The FCA has a range of tools to identify and act against firms or individuals who try to avoid responsibility in that way. Those seeking to liquidate firms must provide information about outstanding complaints, and the assets of collapsed firms cannot be sold on or passed back to former directors without the prior consent of the regulator. The FCA has already used those powers to prevent several individuals and businesses from avoiding their liabilities, and other cases are under investigation. This has caused some individuals to withdraw their applications, knowing full well that they will not get through. Although I acknowledge that this will not give absolute comfort to those who have suffered, I believe that we now have in place a regime that will prevent the practice in future.

Public Sector Pay

Jack Dromey Excerpts

Tuesday 24th July 2018 Commons Chamber

[Elizabeth Truss]

I understand from my colleagues in the Department for Education that this will also apply to Wales.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Past announcements on school budgets have unravelled within days, so is the Chief Secretary guaranteeing that every single penny to fund the teachers’ pay increase will come out of central budgets, with not one single penny falling on school budgets? Does the Chief Secretary accept that this does not change the grim reality of 351 out of 354 Birmingham schools facing real-terms pay cuts and budget cuts over the next two years?

[Elizabeth Truss]

I have been very clear that the additional £500 million over two years will be coming from central DFE budgets. It will be allocated to schools. My right hon. Friend the Secretary of State for Education will be announcing exactly how that allocation will work in due course.

Financial Guidance and Claims Bill [Lords]

Jack Dromey Excerpts

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

[John Glen]

I have tried to make it clear that when we are setting up a new body, it is important that we take time to reflect on the evidence and that we take action in consultation with and alongside that body. I acknowledge the widespread concern that exists in other areas, and I think that the action we are taking gets the balance right when it comes to getting the evidence together and moving as quickly as possible when the case has been made.

The amendments that I have outlined are additional to the amendment that was made in Committee to introduce a ban on claims management cold calling, which will cover calls about claims on matters ranging from mis-sold payment protection insurance to holiday sickness and car accidents. That means that calls about PPI, whether we have been in a car accident or whether we were sick on holiday—we are all familiar with such calls—will be banned unless prior consent has been given to receiving them.

Having ensured that we can tackle cold calling effectively, we plan to remove the existing clause 4 by means of amendment 11. Amendments 12, 25, 26, 28, 29, 45 and 46 are minor and consequential to these changes. In particular, amendment 45 commences new clause 9 on Royal Assent to ensure that there is no unnecessary delay in making regulations, and amendments 44, 47 and 48 prepare the Bill for the new data protection legislation.

[Jack Dromey (Birmingham, Erdington) (Lab)]

I wish to address the issues of pensions cold calling in new clause 9, wider cold calling in amendments 8 and 9, and the duty of care in new clause 6.

Let me start by saying what this Bill is about. In Committee, we heard the story of the Port Talbot shift supervisor who broke down and wept uncontrollably when he met the Pensions Advisory Service. He described how he had been conned into going down the wrong path on his pension, losing tens of thousands of pounds as a consequence. The reason why he wept, he said, was that all 20 on his shift followed his lead, and therefore they, like him, now faced a much bleaker future than would otherwise have been the case.

Pension cold calling is a blight on people up and down the UK. As the Minister has said, we all know the feeling of answering the phone to a number that we do not recognise and hearing that familiar phrase, “We believe that you have been in a car accident.” Indeed, I was heading over to one of the Bill Committee sittings when I received such a call, not having had one for some years. Someone said that they understood that I had been in a car accident. I said that, yes, I had been in an accident 38 years ago, and it was because somebody had run into the back of me. Since then, I have had two subsequent annoying cold calls, yet mine is but a minor problem. The more significant one is the 11 million pensioners who are targeted annually by cold callers. Fraudsters are making 250 million calls a year, which is equivalent to eight every second.

As the Minister knows, we have approached the cold-calling element of this Bill on a four-pronged basis: first, banning pensions cold calling; secondly, pushing for a total ban now on cold calling for claims management companies, thereby tackling the scourge of unsolicited claims head on; thirdly, banning the use of information obtained through cold calling; and, fourthly, ensuring that the strongest possible sanctions are put on those who break the ban, which means that they are struck off.

The Government’s commitment to ban pensions cold calling from June is a necessary and wholly welcome step. May I make the point—such points are not often made in the House—that the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), and the Economic Secretary to the Treasury have engaged with us, the wider community and the pensions industry? Their approach has been constructive. Together, we have come a very long way, but I hope that they will go just that little bit further. Our amendments would tighten the provisions around the ban and ensure that it is fit for purpose. The dual additions of making it an offence to use the information obtained through cold calling and conferring functions on to the Financial Conduct Authority would mean that the ban could be much tighter and more effective.

Although the original clause means that the “introducers” who tend to commit a lot of cold calling in cases such as the British Steel scandal would not be restricted, as they are not covered by the FCA, our amendment would restrict them. The move to ban the use of the information means that those firms which provide financial services and are covered by the FCA will be banned from using the information that the “introducers” gather. This slight shifting of the ban is designed to strengthen it further, as the FCA has much stronger powers than the Information Commissioner’s Office and can strike off members who contravene the rules. We therefore hope that Ministers will reflect further on this.

I now move on to cold calling more widely. A crucial issue on which the Minister has touched is the speed with which we now act. It is not only pensions where cold calling has a negative impact. There are many other industries that have been blighted by cold calling that creates serious consequences for innocent consumers. It is common for claims management companies to try to harvest cases for road traffic accidents and holiday sickness. Unfortunately, and extraordinarily, the UK has become the world leader for holiday sickness claims. The Association of British Travel Agents said that there were about 35,000 claims of holiday sickness in 2016, which represents a 500% rise since 2013. One in five Britons—19%, or around 9.5million people—has been approached about making a compensation claim for holiday sickness. Statistics from just one tour operator, in July and August, show that there were 750,000 travelling British customers, 800,000 Germans and 375,000 Scandinavians. The Scandinavians lodged 39 claims for holiday sickness and the Germans filed 114. The Brits put in just under 4,000 claims.

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[Alex Sobel (Leeds North West) (Lab/Co-op)]

My hon. Friend referred to Jet2, which is headquartered in my constituency and has raised this issue with me on many occasions. It says that these vexatious claims are increasing the cost of flights and holidays for the rest of us. Is it not true that closing this loophole will effectively mean that we can all enjoy a holiday at a much more reasonable price?

[Jack Dromey]

My hon. Friend is absolutely right. When a reputable company such as Jet2 makes the point that the consequence of this practice might be price increases and a reluctance among some hoteliers to enter into agreements, it is clear that innocent holidaymakers will pay the price.

It is not just travel companies that are suffering due to the large number of cold calls. Around 51 million personal injury-related calls and texts are sent by regulated claims management companies each year. The Association of Personal Injury Lawyers has long called for a ban on personal injury cold calls from CMCs, especially as solicitors themselves are already banned from cold calling. Ironically, only recently, the Justice Secretary said that there would be a “forthcoming ban on cold calling” when discussing personal injury claims. If the Justice Secretary believes that there is a forthcoming ban, why do we not act now and include it in this Bill? As Lord Sharkey said in the other place, the ban is necessary to deal with the “omnipresent” menace of cold calls. Baroness Altmann has said:

“People need protection from this nuisance now. They shouldn’t have to wait still more years for a ban....Direct approaches to people on their mobiles or home phones should have no place in the modern world of business.”

The Government, in the public interest, must accept the amendment to ban cold calls when this Bill passes.

[Ruth George (High Peak) (Lab)]

My hon. Friend makes an excellent argument for banning such cold calls. Does he agree that the banning of cold calling by claims management companies for personal injury claims would be a far more effective method of reducing costs for insurance and personal injury than the Government’s proposals, which are currently being considered in the other place, to limit the injury compensation due to innocent victims, as well as to those who are not innocent?

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[Jack Dromey]

My hon. Friend is absolutely right. There are legal consequences for those who make unlawful claims, but there are also business consequences, which in this case knock on to the legal profession and its work. Looking at it from every angle, this is a menace that we need to bring to an end; the question is how soon we can do so.

We hope that the Government will accept our proposals, not least because the Conservative party said at the 2017 general election that it would

“consider a ban on companies cold calling people”.

This is the Government’s chance to keep at least that manifesto promise while protecting the public at the same time.

It is deeply welcome that the Government have taken the powers to ban cold calling for pensions. They have also indicated their support—indeed, the Minister did so earlier—for a wider ban, which our amendment calls for. We are not calling for a blanket ban, which the Minister believes could impinge on non-contentious issues such as doctor-patient calls. The situation is different when such an established relationship exists. We are talking about commercial companies that are pursuing a commercial advantage. All claims management companies should be banned from cold calling, so we urge the Government to set out in the Bill that they will stop the scourge of cold calls by claims management companies.

New clause 6—this is the only other provision to which I will speak—would introduce a duty of care by requiring claims management services to act in the best interests of customers, not least those who find themselves in a vulnerable situation. Due to the scope of the Bill, the new clause relates only to claims management services. However, although this change would be important, we believe that a duty of care is required across all financial service providers. Many consumers are forced to deal with financial providers when they are at their most vulnerable. Such people can include those who have been diagnosed with serious illnesses, including cancer. At present, the Financial Services and Markets Act 2000 requires that the FCA must have regard to

“the general principle that consumers should take responsibility for their decisions”.

Frankly, that is not good enough.

The Financial Services Consumer Panel told the Lords Financial Exclusion Committee that consumers could reasonably be expected to take responsibility for their decisions only if firms had exercised a duty of care towards them. It suggested that such a duty would oblige financial services providers to avoid conflicts of interest and act in the best interests of their customers. The panel proposed amending the law to require the FCA to make rules on a duty of care, arguing that the introduction of such a duty would lead to a much-needed cultural change in the banking sector and the financial sector more generally.

Let us look at just one example. The charity Macmillan Cancer Support has said that people affected by cancer tell it that they experience barriers to getting the support that they need from the banking sector. By 2020, one in two people will have cancer at some point in their lives. Four in five people with cancer are £570 a month worse off on average as a result of their diagnosis. For example, Christine was first diagnosed with cancer in 2009, but is still feeling the financial effects today. She said:

“The financial fall-out of cancer was huge—I went into my overdraft and had to take out a loan to pay it off. When I found out that my credit rating had suffered, it seemed unfair because I was trying my best to get back into work and to have money coming in…For people like me who want to go on living and working, it’s about having that short-term support and understanding. What would have been great was if I’d been able to have an honest conversation with my bank”.

A specific requirement therefore needs to be explicitly stated to ensure that all financial institutions do their best by the most vulnerable people in society. The strong evidence that has been presented by Macmillan clearly shows that a universal duty of care is required across financial services providers.

In the light of examples in which the principle of treating customers fairly is clearly failing customers, how has the FCA reassured Ministers that the current regulatory provisions are sufficient? Can the Minister provide further details on when the discussion paper to which he referred will be brought forward? I know that he is seized of the problem and wants progress to be made at the next stages. That is crucial and, once again, we want to get on with it, because we need to tackle the real problem that has been identified. What assurances can the Minister give that action will be taken to ensure the timely introduction of the duty of care following the outcome of the FCA’s consultation paper?

We strongly support amendments tabled by a number of hon. Members, led by my hon. Friend the Member for Harrow West (Gareth Thomas), that would ensure that banks and financial institutions take proper account of local and regional need, and do not let down local people, as is all too often the case now.

[Crispin Blunt (Reigate) (Con)]

I will speak to amendment 41, which is in my name. My amendment is intended to make a point to the Minister, and I am utterly certain that I will get the assurance that I need in order to do nothing more than discuss it now.

I welcome the introduction of a single financial guidance body, as it should result in a simpler, smarter and smoother experience for the user, helping them to make informed financial decisions. However, we ought to use the opportunity of this Bill not only to ensure that we get the guidance bodies all in one place; we also need to recognise the different types of finance or retirement income that need to be signposted. Financial decision making can be complex, often requiring advice and support, particularly during events such as buying a first home, on retirement or following a bereavement.

I tabled this amendment because people ought to consider their finances in the round. In other words, all liquid and illiquid assets—cash and property—should be considered together. My amendment follows the lead of the noble Lady Greengross in the other place, asking the Government to ensure that this new guidance body highlights the full range of options available, so that its users get the best possible advice to help them to make informed choices about their finances and their futures.

The report published last month by the Housing, Communities and Local Government Committee describes equity release as one of the key tools available to those predominantly in later life. It ensures that older householders are able to pay for care costs or home improvements to give them the option to stay in the homes in which they have built lives and brought up their families. Equity release means that our constituents aged 55 and over who might be asset rich but cash poor can have the option of staying in their own homes by accessing the wealth that they have accrued in that home.

The Equity Release Council published a research paper last April called “Equity Release Rebooted”, in which it estimated that the average value of a defined contribution pension in 2012 to 2014 was £30,200, while over-55s in England possess approximately £1.8 trillion in housing wealth and more than 80% of over-65s own a home. For many, if not most people coming towards the position of making a decision about their retirement, their property is much their greatest asset. It must therefore be sensible for equity release to be signposted and to form at least part of any discussion about funding retirement and later life.

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[Jack Dromey]

In the spirit of being able to get on to the next group, we welcome the ban on pension cold calling. We have sought to extend that ban to all cold calling. If the Minister is prepared to have discussions at the next stages, and before the Bill concludes its passage through Parliament, we would be prepared not to oppose Government amendment 11 or to move our amendments 8 and 9.

[John Glen]

I am grateful to the hon. Gentleman and I acknowledge his kind words, which are reciprocated from our Front Bench. We continue to have a meaningful dialogue on the outstanding concerns that exist between us.

--- Later in debate ---

[Jack Dromey]

Why does this Bill matter? It matters because of that Port Talbot shift supervisor who said he would never, ever forgive himself, having made a mistake and been conned into being sold short on his pension, with all 20 on his shift following his lead. It matters for the single mum in my constituency who had been a victim of domestic violence and had continuously to borrow to pay off her debt. As she said to me, “I borrowed to pay the debt because I borrowed to pay the debt because I borrowed to pay the debt.” It matters to Christine, who was first diagnosed with cancer in 2009 but is still feeling the financial effects today—in debt, pursued constantly for it and her bank oblivious to her condition.

The Bill will help to end scams. It will help to ensure that rogues who are exploiting in particular the vulnerable and undercutting the reputable have no place in the market in future. This is a good Bill. It was strengthened in the other place and then in Committee. It establishes the single financial guidance body, which is a strong step in the right direction.

The Bill has also seen progress today. Progress was previously made on issues of immense importance, in particular pensions cold-calling. It is deeply welcome that the Government have listened to the strong representations made across the House on breathing space and recognise the particular problems of those suffering from mental ill health. The new body will promote greater understanding and help people to plan their finances and retirement.

There is still further progress to be made. We will engage with the Government following our earlier exchanges, because of our very strong view that the time has come to stop all cold-calling for commercial purposes by claims management companies. There is very important progress yet to be made.

The Government have constructively engaged and sent some welcome signals. They have talked about the next stage of the process. The sooner we can get there, the better. I would like to thank a number of people. While there were rather robust exchanges over GKN earlier on in the Chamber, I have to praise both the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), and the Economic Secretary to the Treasury for their helpful, constructive and collaborative approach.

I would like to thank the Work and Pensions Committee for its characteristically first-class intervention and advice, and in particular its Chair, my right hon. Friend the Member for Birkenhead (Frank Field). The Committee can take particular credit for the progress made on the ban on pensions cold-calling.

I would like to thank all colleagues in this place who tabled amendments and contributed to the various debates that took place.

I thank the Members of the other place for the contributions that they made, again across party—particularly, but not exclusively, Lords Sharkey, Altmann, McKenzie of Luton and Drake. I thank also the Commons Clerks and other staff who worked so hard with us to shape the Bill and to take it through Parliament. All those parties and organisations have contributed to the passage of the Bill with their wisdom and many topics of interest.

I thank those organisations and individuals who passed on their research or sometimes heartbreaking stories, which brought home to us the Bill’s importance. I often say that I believe we need a story to tell the stories, and we have heard so many stories—sometimes tragic ones—throughout the Bill’s passage. It is for people like them that we are all here, and I hope that the Bill will help them in the next stages, and as we move forward, making further progress, ensuring that it benefits all, but especially the most vulnerable in our society.

In conclusion, I have something to say to that steel shift supervisor who wept uncontrollably about the consequences of what he had done and the effect on others who followed his lead. We say to him and all those whose stories were told throughout the Bill’s passage that sometimes nothing can be done to put right the wrong that they suffered in the past, but in their own way, by telling their stories, making their contribution, they have helped to bring into being a very important body—the single financial guidance body—that will ensure that never, ever again are others treated as they were.

Financial Guidance and Claims Bill [ Lords ] (Third sitting)

Jack Dromey Excerpts

Tuesday 6th February 2018 Public Bill Committees

[John Glen]

I cannot talk about areas outside my responsibility, but I can address the new clause. I assure the hon. Member for Bermondsey and Old Southwark that I am engaging closely with the FCA and have already achieved an acceleration of its timetable for engagement. It is important that his constituents’ concerns, which he raised previously, are addressed, and I expect the FCA to take steps in that direction urgently.

I was delighted to hear from Macmillan that it has a tremendous working relationship with the FCA. The two organisations are engaged in dialogue, and last year they worked closely on the call for input on the challenges firms face in providing travel insurance for consumers who have had cancer. The FCA will be publishing a feedback statement and its next steps in due course. Dialogue is taking place, and there is responsiveness. For those reasons, it is not appropriate to include these regulatory principles in the Bill, so I request that the hon. Member for Birmingham, Erdington withdraw the amendment.

[Jack Dromey (Birmingham, Erdington) (Lab)]

On a point of order, Mr Rosindell. I seek your guidance. I will be speaking to Opposition new clause 7, but I note that Government amendments 3 and 4 are unobjectionable, so I may go straight on to making my remarks about new clause 7.

[The Chair]

The hon. Gentleman may, of course, speak to as many of the amendments within the group as he chooses, but he must stick to the group.

[Jack Dromey]

I will not depart from your ruling that it is not appropriate to debate terror insurance today. All I will say is that we would like to engage with the Government during the Bill’s next stages, because my hon. Friend the Member for Bermondsey and Old Southwark has identified a significant problem for a number of those who paid a heavy price as a consequence of the terrorist attacks. We hope that the Government are prepared to engage at the next stages accordingly.

As I said, Government amendments 3 and 4 are unobjectionable, but I want to make some preliminary comments about what the Minister said. First, I note that dialogue has taken place with the FCA. My hon. Friend the Member for Harrow West is right to say that the FCA is sometimes captured by big interests in the industry, and that sometimes it has been known to be not exactly the quickest organisation to arrive at a conclusion.

I will say a bit more about why the new clause matters in due course. My hon. Friend the Member for Bermondsey and Old Southwark is absolutely right to say that it is about protecting the vulnerable, in particular at a time of crisis in their lives. It is welcome that the Minister has met with Macmillan—an admirable organisation. Again, I will come on to say something about its representations.

My final point about what the Minister said is about the substance of what should eventually be done. This might be a matter that ends up before the courts. If we ultimately have a duty of care in legislation and providers do not abide by it, they will end up in court. This is about sending an unmistakable message.

The purpose of new clause 7 is to introduce a duty of care requiring claims management services to act with the customers’ best interests in mind, not least customers who find themselves in a vulnerable situation. Due to the current scope of the Bill, the clause relates just to claims management services, but we hope that the Government introduce their own amendment to introduce a duty of care for all financial services firms. As hon. Members will be aware, calls for the introduction of a duty of care received a great deal of support from across the House on Second Reading, and a similar amendment in the other place likewise received strong cross-party support. As the Bill recognises, ensuring that people have access to the right help and advice as soon as possible is essential to stopping financial problems escalating. For people who are ill or considered vulnerable in other ways, that becomes ever more important.

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[Mrs Pauline Latham (Mid Derbyshire) (Con)]

What the hon. Gentleman says is interesting, but is this really a matter for Government? Is it not for the banks to address—to ensure that their staff are trained and sympathetic to people with a terminal diagnosis? It is not something that we can legislate for, but the banks can do something about it.

[Jack Dromey]

I have the greatest respect for the hon. Lady, but I could not disagree more. This is about sending an unmistakable message about a duty of care, which in those circumstances there is a legal obligation to deliver. It also means that banks must train their staff accordingly. A duty of care cannot be just a resolution passed by this House; it must be enacted at the next stages by all providers.

[Mrs Latham]

It is for the banks to train their staff. We cannot train staff from different institutions. We can send a message, but banks must train their own staff to ensure that they act appropriately with people who have a terminal diagnosis.

[Jack Dromey]

We in this House impose obligations in the public interest that must be delivered. We need sensitivity for those going through the trauma of cancer, and having a duty of care sends an unmistakable message to the board of an organisation that that duty of care must be delivered, and it must be enacted with appropriate training by members of staff.

[Huw Merriman (Bexhill and Battle) (Con)]

The hon. Gentleman is being very patient in giving way, but to continue the thread started by my hon. Friend the Member for Mid Derbyshire (Mrs Latham), I spent many years working as a cashier on the frontline in banks and building societies, in between going to university—it was about five years in total. The staff were absolutely equipped to deal with such matters—indeed, they had to be, not least when probate matters were being dealt with. Those staff had to be incredibly sensitive, and I think the hon. Gentleman is rather getting the industry wrong, as far as the sensitivity of those staff is concerned.

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[Jack Dromey]

In that case, the hon. Gentleman is saying that Macmillan is getting it wrong. The Minister has engaged with Macmillan with an open mind—I warmly welcome that—and has heard the concerns direct, based on firm evidence, that at the moment too many people suffering from cancer are not treated with the respect and sensitivity they deserve.

[Huw Merriman]

I have another example from a cancer perspective, which I will not go into; I work very closely with Macmillan on a personal basis, but that is probably better left to one side. What I will say is that when this House is prescriptive in legislation, rather than letting organisations deal with issues in the manner that they may be best equipped to do, it does not always work out as intended.

[Jack Dromey]

With the greatest respect, the Government are prescriptive the whole time, and I think this is an area ripe for prescription. I stress again that we need to send an unmistakable message that regulated providers have certain obligations that fall upon them. There are already obligations imposed under law, for example on financial probity. We should add to those a duty of care to customers, particularly when they are suffering from or dying from cancer. I should have thought that was entirely unobjectionable. Macmillan is absolutely right and the Minister has been right to respond to its representations. I will come in a moment to what I hope will happen at the next stages.

To return to my point, staff did not have knowledge about the products and the help available to people affected by cancer. If we are to tackle such problems, the provision of appropriate support, flexibility in policies and procedures, and ensuring that staff are appropriately trained to support vulnerable customers need to be at the heart of banking culture.

One of the things that struck me most in the findings was that only one in 10 people with cancer had told their bank about their diagnosis in the first place. Many people with cancer still do not think their bank will be able to help them, while others worry that telling the bank will have negative consequences, so they are reluctant to disclose their diagnosis. Regardless of whether that negative perception is justified on all occasions, it represents a serious barrier to people seeking help early and tells us that the existing rules are not adequate. Despite some provisions in the area, the banking sector is still a long way off the point where meeting the needs of vulnerable customers is at the heart of corporate culture, hence the clear evidence from Macmillan.

The financial services consumer panel has noted that the regulatory principle of treating customers fairly does not adequately ensure that firms exercise appropriate levels of care towards their customers. It is interesting that the FCA’s own panel concluded that. If banks and building societies had a legal duty of care towards their customers, it would give people with cancer confidence to disclose their diagnosis, knowing that they could trust their bank to act in their best interests.

Consumers are also demanding action in this area. More than 20,000 people have signed an open letter from Macmillan Nurse Miranda, calling for a duty of care to be introduced. I urge the Government to look at the recommendation made by the House of Lords Financial Exclusion Committee on a duty of care, which has been strongly evidenced by Macmillan Cancer Support. The Committee concluded that, as first recommended by the financial services consumer panel, the Government should amend the Financial Services and Markets Act 2000

“to introduce a requirement for the FCA to make rules setting out a reasonable duty of care for financial services providers to exercise towards their customers.”

I appreciate that any change as significant as this must be subject to proper consideration and consultation, as the Minister said. It is therefore welcome that the FCA has recognised that and is committed to publishing a discussion paper on the issue. It is welcome that the Minister has pressed the FCA to bring that forward, and I will come on to timescale in a moment. However, the Government and the FCA have said that this must wait until after the withdrawal from the EU becomes clear. I think that now, as the Minister said earlier, that may no longer be the case, not least because who knows when we will withdraw from the European Union—

[John Glen]

We are very clear on that.

[Jack Dromey]

There is a certain lack of clarity on the part of the Government about that end. Given that the introduction of a duty of care would still require legislation, when can we expect it to be introduced if we do not use the opportunity presented by the Bill? Will the Minister clearly set out his view as to the likely timescale for the introduction of a duty of care, from the initial consultation process through to the point at which consumers begin to benefit from any change? Given the evidence that has been presented about the need for further support for vulnerable customers, is a prolonged delay acceptable? I urge the Minister to take note of the breadth of support for this issue and the strong evidence presented on the need for action. I suggest that the Government reflect on that further and bring forward suitable proposals on Report.

My final point is that I sense a joint determination to act, and that is welcome. We should act, but what does that mean in terms of both substance and timescale? We will not press the new clause to a vote but I invite the Minister to undertake that he will come back on Report to set out with some clarity the likely timescale and substance of what the Government might eventually do.

[John Glen]

I am grateful to the hon. Gentleman for his comments. There is broad agreement on how serious the issue is, but I would characterise the Government’s approach as wanting not to send a message but to secure an outcome. They want to secure an outcome when they understand exactly what the impact of the changes might be.

As I said in some of my earlier remarks, there is huge uncertainty about how a potential duty of care would impact on firms and consumers. That is why I am very pleased with the accelerated timetable. I acknowledge that there is no absolute clarity about what will flow from that, but that is because we do not know what the outcome of the discussion will be. However, I take on board the hon. Gentleman’s concerns and I acknowledge his sensitivity to what Macmillan has said—it is unacceptable that 11% of people who have cancer tell their financial service provider—but it is also true, as my hon. Friend the Member for Bexhill and Battle said, that not all banks are doing a poor job. I heard from Macmillan about the wonderful work that Nationwide has done, and I think it is for other banks to reflect on what they need to do to change their behaviours.

[John Glen]

I am grateful for the hon. Gentleman’s comments, but I do not share his characterisation of the FCA’s willingness to engage on this. As I set out, the FCA is engaged in dialogue with Macmillan and has now accelerated the timetable for dealing with the subject. I will reflect on the comments made and see what can be said to give more assurance further on, but I am convinced that the dialogue with the FCA will lead to a proportionate outcome that takes full account of the impact. I therefore reiterate my hope that the new clause will be withdrawn.

[Jack Dromey]

On the basis of what the Minister has said—that he will come back on Report—we will not be pressing new clause 7.

Amendment 3 agreed to.

Amendment made: 4, in clause 24, page 18, line 7, at end insert—

“( ) In section 137R (financial promotion rules)—

(a) in subsection (1), omit the “or” at the end of paragraph (a) and after that paragraph insert—

‘(aa) to engage in claims management activity, or’;

(b) in subsection (6), for ‘has’ substitute ‘and “engage in claims management activity” have’.”—(John Glen.)

The result of this amendment of the Financial Services and Markets Act 2000 would be that the FCA may make rules about the communication, or the approval of another person’s communications, by authorised persons of invitations or inducements to engage in claims management activity.

Clause 24, as amended, ordered to stand part of the Bill.

Schedule 4 agreed to.

Schedule 5

Regulation of claims management services: transitional provision

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[John Glen]

Amendments 20 to 22 are technical amendments that extend the FCA’s data-gathering powers to Scotland. They amend schedule 5, which contains transitional provisions to extend the FCA’s information-gathering powers; to enable it to take preparatory steps, such as to consult on rules; and to enable it to adopt rules made by the current regulator. That ensures that the FCA can obtain information and documents from claims management companies operating or previously operating in Scotland, if the FCA considers that it needs the information or documentation in preparation for its role as the regulator of claims management companies.

The amendments will help ensure that Scottish consumers are adequately protected when the regulation for financial services claims management companies is transferred to the FCA. I am sure that hon. Members would agree that it is right to ensure that the regulator is suitably prepared to regulate Scottish claims management companies, and will agree with the amendments.

[Jack Dromey]

It is a sensible move to give the FCA those extended powers. Therefore, we note the proposed amendments. Our colleague from the Scottish National party, the hon. Member for Paisley and Renfrewshire South, might wish to comment, but this seems to us a logical and sensible proposal.

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

I agree.

Amendment 20 agreed to.

Amendments made: 21, in schedule 5, page 41, line 23, leave out from “a” to end of line 24 and insert “person falling within paragraph 1B.”

This amendment and amendment 22 would enable the FCA to obtain reports from claims management companies operating in Scotland if the FCA considers that it needs the report in preparation for its role as the regulator of claims management companies.

Amendment 22, in schedule 5, page 41, line 24, at end insert—

“1A A person falls within this paragraph if the person—

(a) is or at any time was authorised under section 5(1)(a) of the Compensation Act 2006 (provision of regulated claims management services), or

(b) is, or at any time was, providing services in Scotland which the person would be, or would have been, prohibited from providing in England and Wales by section 4(1) of the Compensation Act 2006 unless authorised under section 5(1)(a) of that Act.

1B A person falls within this paragraph if the person—

(a) is authorised under section 5(1)(a) of the Compensation Act 2006 (provision of regulated claims management services), or

(b) is providing services in Scotland which the person would be prohibited from providing in England and Wales by section 4(1) of the Compensation Act 2006 unless authorised under section 5(1)(a) of that Act.”—(John Glen.)

See the explanation for amendments 20 and 21.

Schedule 5, as amended, agreed to.

Clause 25

Power of FCA to make rules restricting charges for claims management services

Question proposed, That the clause stand part of the Bill.

[John Glen]

Clause 25 inserts a new section into the Financial Services and Markets Act 2000 to give the FCA the power to cap the amount that firms can charge customers for the claims management services it regulates. The clause also places a duty on the FCA to make rules restricting charges for claims for financial services or products. The Government believe that placing a duty on the FCA to cap the amount that firms can charge consumers for services related to financial services claims is the only satisfactory way of ensuring that consumers receive good value for money. This is especially true given that consumers can, for example, take complaints about the mis-selling of payment protection insurance to the financial ombudsman for free. In addition, the general fee-capping power provided by the clause gives the FCA the necessary flexibility to respond to future changes in the claims management sector.

[Jack Dromey]

I would like to make two points. First, the proposed changes are unobjectionable and we note them. Secondly, I will, however, be speaking to amendments 47 and 48 in respect of allowing consumers to keep 100% of their PPI compensation, but we will come to those in due course.

Question put and agreed to.

Clause 25 accordingly ordered to stand part of the Bill.

Clause 26

PPI claims and charges for claims management services: general

[John Glen]

I beg to move amendment 5, in clause 26, page 21, line 17, leave out “and 28” and insert

“to (PPI claims: interim restriction on charges imposed by legal practitioners after transfer of regulation to FCA)”.

This amendment would apply the explanation of terms given in clause 26 to the new clause inserted by NC3.

[John Glen]

These amendments ensure that legal services regulators can continue to impose fee restrictions for PPI claims from the point at which the transfer of regulation of CMCs to the FCA takes place. This will be effective in the case of the Law Society of England and Wales until it implements its own rules on fee capping and, in the case of the General Council of the Bar and the Chartered Institute of Legal Executives, until 29 April 2020.

The interim fee cap will be set at 20% of the claim value, excluding VAT. It will apply to CMCs and legal services providers, and will be enforced by the relevant regulators from two months after the Bill receives Royal Assent. The interim fee cap will ensure fair and proportionate prices for consumers using claims management services for mis-sold PPI claims.

Government amendments 5 and 6 and new clause 3 ensure that the interim fee cap provisions introduced as a concessionary amendment in the House of Lords work together with the other Government amendments we are discussing today, and provide the legal services regulators with the power to restrict fees in relation to claim management services. The amendments will ensure that consumers are equally protected from excessive fees when using a legal services provider to make a claim for mis-sold PPI, and that there is continuity of coverage for the fee cap throughout the transfer of regulation. This is similar to the existing provisions in the Bill in relation to the FCA. I hope that all Members will agree that these are sensible and desirable amendments for the purposes of consumer protection.

[Jack Dromey]

Briefly, I have two related points. First, we agree that the legal services regulators should be given those powers. Secondly, and crucially, the objective is to protect consumers. I once again refer to amendments 47 and 48, which I will speak to shortly.

Amendment 5 agreed to.

Amendment made: 6, in clause 26, page 22, line 11, at end insert—

“, and

(c) so far as relevant for the purposes of section (PPI claims: interim restriction on charges imposed by legal practitioners after transfer of regulation to FCA), to be read as referring to any service which is a relevant claims management activity (within the meaning given by subsection (5) of that section).”—(John Glen.)

This amendment would define what references to “regulated services” in clause 26 mean when relevant for the purposes of the new clause inserted by NC3.

Clause 26, as amended, ordered to stand part of the Bill.

Clause 27

PPI claims: interim restriction on charges before transfer of regulation to FCA

[Jack Dromey]

I beg to move amendment 47, in clause 27, page 22, line 30, leave out subsections (1) to (4) and insert—

“(1) A regulated person—

(a) must not charge a claimant for regulated claims management services provided in connection with the claimant’s PPI claim, unless those charges are made in accordance with section 26(4); and

(b) must not enter into an agreement that provides for the payment by a claimant, for regulated claims management services provided in connection with the claimant’s PPI claim, of charges which would breach, or are capable of breaching, the prohibition in paragraph (a).

(2) All charges incurred by a regulated person in the course of providing regulated claims management services in connection with a claimant’s PPI claim must be paid by the person against whom the claimant’s successful PPI claim was made.

(3) A regulated person—

(a) must not charge a person for regulated claims management services provided in connection with a claimant’s PPI claim, an amount which exceeds the fee cap for the claim; and

(b) must not enter into an agreement that provides for the payment by a person, for regulated claims management services provided in connection with the claimant’s PPI claim, of charges which would breach, or are capable of breaching, the prohibition in paragraph (a).

(4) A breach of subsection (1) is not actionable as a breach of statutory duty; but

(a) any payment made by a claimant in breach of subsection (1) is recoverable by the claimant; and

(b) any agreement entered into in breach of subsection (1)(b) is not enforceable to the extent it provides for a payment that breaches or is capable of breaching the prohibition in subsection (1)(a).

(4A) A breach of subsection (3) is not actionable as a breach of statutory duty; but

(a) any payment made by the person against whom the claimant’s successful PPI claim was made, in excess of the fee cap for a PPI claim is recoverable by the person; and

(b) any agreement entered into in breach of subsection (3)(b) is not enforceable to the extent it provides for a payment that breaches or is capable of breaching the prohibition in subsection (3)(a).

(4B) In subsections (4) and (4A) “payment” means a payment of charges for regulated claims services provided in connection with the PPI claim.

(4C) A relevant regulator—

(a) must ensure that it has appropriate arrangements for monitoring and enforcing compliance with subsections (1) and (3) as they apply to the regulated persons for whom it is the relevant regulator;

(b) may make rules for the purpose of doing so (which may include provision applying, in relation to breaches of subsections (1) and (3), functions the relevant regulator has in relation to breaches of another restriction.)”.

This amendment and Amendment 48 would mean that firms would be required to pay CMC costs for PPI claims where the firm is found to be at fault and the consumer has used a CMC rather than claim direct. This would only apply for the interim period until the new FCA regulations come into force, or until August 2019 which is the deadline for making PPI claims, whichever is sooner.

[The Chair]

With this it will be convenient to discuss amendment 48, in clause 28, page 24, line 34, leave out subsections (2) to (4) and insert—

“(2) The rule is that an authorised person—

(a) must not charge a claimant, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, unless those charges are made in accordance with section 26(4); and

(b) must not enter into an agreement that provides for the payment by a claimant, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, of charges which would breach, or are capable of breaching, the prohibition in paragraph (a).

(3) All charges incurred by an authorised person in the course of providing regulated claims management activity in connection with a claimant’s PPI claim must be paid by the person against whom that claimant’s successful PPI claim was made.

(4) An authorised person—

(a) must not charge a person, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, an amount which exceeds the fee cap for the claim; and

(b) must not enter into an agreement that provides for the payment by a person, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, of charges which would breach, or are capable of breaching, the prohibition in paragraph (a).

(4A) A breach of subsection (2) is not actionable as a breach of statutory duty (despite section 138D(2) of the Financial Services and Markets Act 2000) but—

(a) any payment made by a claimant in breach of subsection (2) is recoverable by the claimant; and

(b) any agreement entered into in breach of subsection (2)(b) is not enforceable to the extent it provides for a payment that breaches or is capable of breaching the prohibition in subsection (2)(a).

(4B) A breach of subsection (4) is not actionable as a breach of statutory duty (despite section 138D(2) of the Financial Services and Markets Act 2000) but—

(a) any payment made by a person in excess of the fee cap for a PPI claim is recoverable by the person; and

(b) any agreement entered into in breach of subsection (4)(b) is not enforceable to the extent it provides for a payment that breaches or is capable of breaching the prohibition in subsection (4)(a).

(4C) In subsections (4A) and (4B) “payment” means a payment of charges for regulated claims services provided in connection with the PPI claim.”

This amendment and Amendment 47 would mean that firms would be required to pay CMC costs for PPI claims where the firm is found to be at fault and the consumer has used a CMC rather than claim direct. This would only apply for the interim period until the new FCA regulations come into force, or until August 2019 which is the deadline for making PPI claims, whichever is sooner.

[Jack Dromey]

The amendment would allow consumers to keep 100% of the PPI compensation. The Government introduced an interim cap on the fees that claims management companies could charge consumers in relation to payment protection insurance claims. That was a welcome move in the right direction, but it does not go far enough to protect consumers from paying disproportionately high fees for what is often very little work. The Ministry of Justice estimates that the average amount of commission charged to consumers by CMCs is 28% plus VAT. The FCA estimates that the average payout for PPI mis-selling is around £1,700 which means that a CMC would, on average, charge a successful claimant £476 plus VAT.

Although the proposed fee cap will reduce the amount that consumers have to pay to CMCs, it would still mean an average charge of £340, with VAT on top. If the Government want to take meaningful action to protect consumers from high fees, they should propose a solution that allows consumers to keep 100% of their PPI compensation. They should require firms to pay CMC costs for PPI claims—capped at 20% and VAT—when they are at fault and the consumer has used a CMC rather than claiming directly.

This measure would apply only for the interim period until new FCA regulations come into force, or until August 2019, which is the deadline for making PPI claims, whichever is sooner. This would incentivise firms still paying compensation—and it is shameful that they still are; getting justice for the people concerned is like pulling teeth—to proactively reach out and encourage consumers to make claims directly to them, and I am bound to say that it is something that should and must happen. It would also fully protect consumers from paying high charges to CMCs.

In summary, the Government’s proposal is a welcome step in the right direction, but I would welcome an explanation from the Minister as to why he cannot take this further step that would see those that were wronged receive 100% of the compensation so that this wrong is put right.

[John Glen]

I am grateful to the hon. Gentleman for setting out amendments 47 and 48, which seek to make firms at fault pay the fees for claims management services used to pursue successful PPI claims. I understand that this approach is intended to incentivise firms to be more proactive in offering compensation when dealing with consumer complaints. However, it could encourage more speculative and unmeritorious claims, adding waste to the redress system, to the detriment of consumers and the industry. The amendment also has the potential to allow CMCs to charge consumers directly when they are unsuccessful in pursuing a PPI claim. This would serve only to add to the incentives for taking forward speculative claims, and I am not sure that that is the Opposition’s intention.

I also do not believe that the measure is necessary. The FCA is already taking direct action to ensure that firms do not make it difficult for consumers to claim compensation, and there have been significant improvements in the handling of PPI complaints by firms. By September 2017, firms were upholding around 80% of claims. Since January 2011, firms have handled over 20.8 million PPI complainants and paid over £29 billion in redress to consumers found to have been mis-sold a PPI policy, and rightly so.

In addition, as of March 2017 firms had sent over 5.5 million letters to customers they identified as being at high risk of having suffered a past mis-sale and who had not complained, inviting them to do so. The FCA also launched a two-year consumer awareness campaign in August 2017, paid for by the relevant firms, to raise awareness of the deadline and encourage consumers to decide whether to complain, as well as highlighting free routes for pursuing a claim.

Finally, it is important to note that consumers do not need to use the CMCs to make a claim. They can go directly to the relevant firm and subsequently to the Financial Ombudsman Service for free. Making a complaint is a simple process that many people will be able to do for themselves. A number of sources of information are available to help individuals to understand how to make a complaint, including websites and phone lines for the FCA and Financial Ombudsman Service. In the light of these arguments, I encourage the Opposition spokesman to withdraw the amendment.

[Jack Dromey]

I will make two points in response. First, the Minister is right to say that there are channels other than CMCs, which we will come to later. Until such time as we ban cold calling by CMCs, there will continue to be an industry of CMCs out there ringing people up to ask, “Have you got a PPI claim?”

Secondly, I do not see the problem in sending an unmistakable message to those who have wronged the public that they must put that right, and that they must do so proactively. Rather than sitting on the knowledge of a lot of mis-selling, failing to put that right and waiting until a claim is made, the better approach in the public interest would be to send the unmistakable message that it is better to settle with those who have been wronged, or else.

I am not completely convinced by the Minister’s reply, but I am convinced that he—a decent man with an open mind—will reflect on this further. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clause 28 stand part.

--- Later in debate ---

[John Glen]

New clauses 4 and 5 place a duty on the Law Society of England and Wales to cap fees in relation to financial service claims management activity, and give the Law Society of Scotland a power to restrict fees charges for that activity. The clauses also give some legal services regulators in England and Wales a power to restrict fees charged for broader claims management services, and give the Treasury a power to extend the Law Society of Scotland’s fee-capping power to broader activity in the future. As I am sure hon. Members are aware, claims management services are carried out not only by claims management companies, but sometimes by legal service providers as well. That is why the Government are introducing the new clauses. They will ensure that consumers are protected no matter which type of claims management service provider they use—whether regulated by the legal service regulators or by the Financial Conduct Authority.

As Members will know, fees charged for claims management services have attracted severe criticism. The Public Accounts Committee 2016 report on financial services mis-selling commented:

“It is a failure of the system of regulation and redress that claims management companies have been able to make up to £5 billion out of compensation to victims of mis-selling.”

The Bill already contains provisions to ensure that the FCA will cap fees in relation to financial product and services claims, and new clause 4 replicates that duty in relation to the Law Society of England and Wales. It also mirrors the FCA’s broader power to restrict fees for claims management activities by providing a similar power to the General Council of the Bar, the Chartered Institute of Legal Executives, and the Law Society of England and Wales. That power will enable them to make rules that cap the fees that legal service providers charge for claims management services. That will enable the legal services regulators to adapt to any future changes in the market, alongside the FCA.

New clause 4 also gives the Law Society of Scotland a power to restrict fees in relation to financial services claims management, and new clause 5 gives the Treasury a power to extend that provision to include wider claims management activity, should that be required in the future. That gives the flexibility required to respond to any future changes in the claims management sector. Although the Government are of the view that the regulation of claims management activity is reserved, we have worked in a spirit of co-operation with the Scottish Government to ensure that the provisions are fit for purpose in Scotland, and that Scottish consumers have the same high standards of protection when using claims management services as consumers in England and Wales. I hope Members agree that the new clauses collectively provide for the best protection of consumers across Great Britain.

[Jack Dromey]

The Minister was right to refer to the Public Accounts Committee report. It is nothing short of scandalous that there has been an immense industry, often on the back of misery. Consumers deserve to be properly protected in future. The clauses are sensible because they go beyond claims management companies, with the duty on the Law Society. Of course, it is about not only CMCs, but legal service providers.

Finally, with regard to new clause 5, it makes sense for there to be flexibility to extend the provision to restrict fees in the future, given potential changes in the nature of the industry.

Question put and agreed to.

New clause 4 accordingly read a Second time, and added to the Bill.

New Clause 5

Extension of power of the Law Society of Scotland to make rules

“(1) The Treasury may by regulations amend section (Legal services regulators’ rules: charges for claims management services) for the purpose of extending the power in subsection (3) of that section so as to apply to—

(a) all relevant claims management agreements;

(b) all relevant claims management activity;

(c) any description of relevant claims management agreement;

(d) any description of relevant claims management activity.

(2) The Treasury must obtain the consent of the Scottish Ministers before making regulations under subsection (1).

(3) Regulations under this section—

(a) are to be made by statutory instrument;

(b) may make incidental, supplemental or consequential provision.

(4) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”—(John Glen.)

This new clause would permit the Treasury, with the consent of the Scottish Ministers, to make regulations which extend the power given to the Law Society of Scotland to make rules by NC4.

Brought up, read the First and Second time, and added to the Bill.

New Clause 6

Cold calling about claims management services

“(1) The Privacy and Electronic Communications (EC Directive) Regulations 2003 (S.I. 2003/2426) are amended as follows.

(2) In regulation 21 (calls for direct marketing purposes), after paragraph (5) insert—

‘(6) Paragraph (1) does not apply to a case falling within regulation 21A.’

(3) After regulation 21 insert—

‘21A Calls for direct marketing of claims management services

(1) A person must not use, or instigate the use of, a public electronic communications service to make unsolicited calls for the purposes of direct marketing in relation to claims management services except in the circumstances referred to in paragraph (2).

(2) Those circumstances are where the called line is that of a subscriber who has previously notified the caller that for the time being the subscriber consents to such calls being made by, or at the instigation of, the caller on that line.

(3) A subscriber must not permit the subscriber’s line to be used in contravention of paragraph (1).

(4) In this regulation, “claims management services” means the following services in relation to the making of a claim—

(a) advice;

(b) financial services or assistance;

(c) acting on behalf of, or representing, a person;

(d) the referral or introduction of one person to another;

(e) the making of inquiries.

(5) In paragraph (4), “claim” means a claim for compensation, restitution, repayment or any other remedy or relief in respect of loss or damage or in respect of an obligation, whether the claim is made or could be made—

(a) by way of legal proceedings,

(b) in accordance with a scheme of regulation (whether voluntary or compulsory), or

(c) in pursuance of a voluntary undertaking.’

(4) In regulation 24 (information to be provided for the purposes of regulations 19 to 21)—

(a) in the heading, for ‘, 20 and 21’ substitute ‘to 21A’;

(b) in paragraph (1)(b), after ‘21’ insert ‘or 21A’.”—(John Glen.)

This amendment inserts a provision into the Privacy and Electronic Communications (EC Directive) Regulations which prohibits live unsolicited telephone calls for the purposes of direct marketing in relation to claims management services except where the person called has given prior consent to receiving such calls.

Brought up, and read the First time.

[John Glen]

I beg to move, That the clause be read a Second time.

--- Later in debate ---

[Jack Dromey]

I again seek your guidance, Mr Rosindell. I presume I am able now to address new clause 6 and our new clause 9. New clause 8 has not been selected, but I want to make reference to a couple of points of substance in relation to it, which are relevant to this debate. I seek your guidance on that.

[The Chair]

Certainly you may speak to new clause 9. New clause 8 has not been selected, so you must mention it in a way that would be acceptable. You are experienced enough to follow the deft way the hon. Member for Harrow West dealt with it.

[Jack Dromey]

Perhaps I will emulate the fleetness of parliamentary foot of my hon. Friend the Member for Harrow West.

I will start with a rather bizarre example, which is of no consequence to me personally. Ironically, as we were getting ready for Committee last week, I had a cold call. Out of the blue, the individual concerned said, “I understand you’ve had a car accident,” to which I replied, “Yes. How did you know?” She said, “We’re here to help you.” I then said, “Actually, the car accident was 38 years ago. I pulled up at a pedestrian crossing and somebody ran into the back of my car.” She said, “Oh. I’m not sure we can help you with those circumstances.”

To make a more serious point, the new clause would require the FCA to ban cold calling for claims management companies. Critically, it would also ban the use by those companies of any data obtained by cold calling. Together, those provisions would make cold calling for CMCs illegal and would cut off the revenue stream to cold callers by preventing CMCs from using their data. The new clause would also allow the FCA to set up appropriate penalties for any breach of either of those bans, which would come into effect with the passing of the Bill.

Cold calling is not just a social nuisance; it is often a direct threat to consumers’ financial wellbeing. It is often an invitation—or, more exactly, an inducement—to criminal activity. There are now 2.6 million cold calls every month. That number has increased by 180% in the last year. Whatever the Information Commissioner’s Office is doing is not working, and the problem continues to grow rapidly.

A Which? report from November 2016 found that in 17 of the 18 cities surveyed, more than a third of all private phone calls were nuisance calls, and that four in 10 people in the Scottish sample were intimidated by the calls. Older people are particularly vulnerable to cold callers. I have seen that personally: a 99-year-old woman was cold called four times, and on one of those occasions she suffered serious consequences as a result. Like her, more than 11 million pensioners are targeted annually by cold callers. Fraudsters make 250 million calls a years—equivalent to eight every second. For some, they are a danger. They prey on some of the most vulnerable people in society.

There is sadly no better example of that than the British Steel workers in Port Talbot. When a deal was struck last year to keep Tata Steel UK afloat, members of the £15 billion British Steel pension fund were given the option to shift their assured benefits to the Pension Protection Fund, join a new retirement scheme backed by Tata or transfer to personal pension funds. However, that led to what has been called a “feeding frenzy” at the site, as dodgy introducers preyed on workers, who were more than likely confused about the position of their pension, and may not have had the financial education to make such an important decision themselves.

[Craig Tracey (North Warwickshire) (Con)]

We all agree that cold calling is a huge issue, but the problem with the new clause is that it seeks to place the burden of establishing when cold calling is taking place on the FCA. Does the hon. Gentleman agree that that approach would divert resources away from what it should be doing—ensuring that the right business models are in place and that there is better transparency for consumers?

[Jack Dromey]

Given the evidence of huge growth in cold calling and the consequences that individuals can pay as a result—I will give a tragic example in a moment—our strong view is that the time has come to send an unmistakeable message: a ban on cold calling, full stop.

I will give an example in relation to Port Talbot and the consequences I referred to last week. The Pensions Advisory Service was eventually asked to go down to Port Talbot, some months after the crisis developed. It told me only last week the heartbreaking story of that shift supervisor who had worked for British Steel all his life. He burst into tears and said, “Wrongly advised, I made the wrong decision.” He also said, “I’ll never, ever forgive myself, because the 20 people on my shift who I supervised all followed my example.”

The evidence is powerful and compelling, and I do not think for one moment the Government would argue against it. The question is: what do we now do about it? The introducer concerned at Port Talbot—I have often described them as vultures—bought meals for workers in local pubs and convinced them to transfer their pensions, often into totally unsuitable schemes, where some could have lost up to six figures from the total of their pension.

The Financial Conduct Authority is probing concerns about pension changes that appear to have affected about 130,000 members of the Tata retirement fund. South Wales police are now investigating. That is a clear example from the world of work where dodgy practices have been used, with a negative and often serious impact on workers’ finances. Our new clause would stop all unsolicited real-time approaches by, on behalf of, or for the benefit of companies carrying out claims management services.

There is a huge and rising number of claims for alleged holiday sickness. In July and August 2016 alone, one operator took 750,000 British, 800,000 German and 375,000 Scandinavian customers to Spain. The Scandinavians lodged 39 claims for holiday sickness—essentially, food poisoning—the Germans 114 and the British about 4,000. It is not only pensions where cold calling has had a negative impact. It is also commonplace for claims management companies to use it to harvest cases of road traffic accidents as well as for holiday sickness, where sadly, the UK has become the world leader.

The Association of British Travel Agents said there were about 35,000 claims for holiday sickness in 2016: a 500% rise since 2013. About one in five Britons—19%, or about 9.5 million people—has been approached about making a compensation claim for holiday sickness. As a result, hoteliers in the markets affected are now threatening significant price increases, and some are even considering withdrawing the all-inclusive product from UK holidaymakers entirely. The great majority of honest holidaymakers may suffer as a consequence of the wrongdoing of a small minority, encouraged by cold calling.

A total ban on cold calling would likely lead to a fall in the harvesting of false holiday sickness claims. In the words of Lord Sharkey in the other place a ban is necessary to deal with the “omnipresent menace” of cold calls. Baroness Altmann has said:

“People need protection from this nuisance now. They shouldn’t have to wait still more years for a ban....Direct approaches to people on their mobiles or home phones should have no place in the modern world of business.”

That kind of thing not only costs our travel industry a huge amount and raises prices for everyone but directly encourages criminal acts on a larger scale, and it is welcome that there have been some early prosecutions accordingly.

[Neil Coyle]

I thank my hon. Friend for raising the issue and for mentioning ABTA, which is based in my constituency. ABTA has done a huge amount of work on the need to introduce exactly what he advocates, to highlight incidents of people fraudulently trying to make claims, supported by cold calling, while posting on Facebook and elsewhere about how much they have enjoyed their holidays and how boozed up they have been. There is clearly a need to address the issue.

[Jack Dromey]

My hon. Friend is absolutely right. ABTA is increasingly concerned about the consequences for consumers more generally and for its business in particular. Hoteliers and airlines will suffer unless the growing scandal, at the heart of which is shameless cold calling, is ended.

We already ban cold calling for mortgages, and we welcome the Government’s commitment to introducing an immediate ban on cold calling for pensions, but we should also be able to ban cold calling for CMCs, and include a ban on the commercial use of data obtained by cold calling. An unmistakeable message needs to be sent: “If you cold call illegally we will probably catch you and, in any case, you will not be able to sell or use any data collected illegally”.

Laws can, of course, be broken, which is why the new clause gives the FCA the power to set appropriate penalties for a breach of either of the bans. Since the banning of cold calling for mortgages, technology has made enormous progress, and we hope that the Government will be prepared to go yet further in the next stages. The ban on cold calling for mortgages has made truly massive-scale cold calling illegal, but the scale of cold calling continues to grow. Cold calling can and does have damaging and dangerous consequences, especially for the vulnerable, for the elderly, for workers like those in Port Talbot at a time of crisis in their lives, and for the business community. It is time to call a halt to all of that, which is what new clause 9 would do.

New clause 6 inserts a provision into the European Union’s privacy and electronic communications directive, which prohibits unsolicited telephone calls for the purposes of direct marketing, in relation to claims management services, except when the person called has given prior consent to receiving such calls. The provision will treat the telephone numbers of everyone cold called about claims management as if they were listed on the telephone preference service register. In 2017, the ICO received 11,805 reports of unsolicited direct marketing calls about claims management from people already on the TPS register, in addition to reports of 17,112 calls and texts for which absence from the register was not deemed to represent consent. The Government amendment will simply add more cases to the yearly total—28,917 in 2017—and will do little to stop the scourge of cold calling. We will not oppose the provision but we invite the Government to comment on our points.

On new clause 8, which has not been selected, the Chairman is absolutely right that it would be an abuse—

[The Chair]

The hon. Gentleman knows that he cannot speak directly to new clause 8.

[Jack Dromey]

In the circumstances, of course I accept your ruling, Mr Rosindell. All I would say is that the example of the Port Talbot introducers is scandalous and the impact on the lives of the vulnerable is outrageous. We are determined to stamp out that practice. Coming back to the core proposal contained in our new clause, the time has come to ban cold calling, full stop.

--- Later in debate ---

[John Glen]

Opposition new clause 9 is identical to the Lords amendment and seeks to compel the FCA to ban unsolicited direct approaches by, on behalf of or for the benefit of companies providing claims management services. It also seeks to ban those companies from using data obtained through those methods. Unfortunately, it would give the FCA a duty it cannot enforce under its current regime.

I assure the hon. Member for Birmingham, Erdington and the hon. Member for Lewisham West and Penge that the Government are committed to tackling the issue properly and have consulted with the FCA, the claims management regulation unit and the Information Commissioner’s Office to ensure that Government new clause 6 does so in the most effective way—it will amend the Privacy and Electronic Communications (EC Directive) Regulations 2003 to prohibit direct marketing calls by claims management services unless an individual has given their consent. I was challenged on that matter, and I will clarify by letter.

The provision will be implemented by the ICO as the regulator responsible for the enforcement of the regulations. It has considerable powers and can issue fines of up £500,000. Under the incoming general data protection regulation, the unlawful use of personal data can attract fines of up to £17 million or 4% of annual turnover. The ICO is committed to enforcing the sanctions in the Privacy and Electronic Communications (EC Directive) Regulations 2003 and has issued nearly £3 million in monetary penalties for breaches of direct marketing since January last year. We have worked with the ICO in developing the new clause, and it is confident that it will be able to enforce it in conjunction with the FCA.

The FCA will of course have a role to play and will use all the tools available to take action where it discovers behaviour causing consumer harm. I acknowledge the cases that both Members raised, which are unacceptable. I am also confident that the FCA will work closely with the ICO where breaches are identified. I am sure members of the Committee will agree that it is better to include a new clause that will work—Government new clause 6—than to include new clause 9. As such, I encourage both Members not to press their new clause to a vote.

[Jack Dromey]

We are not convinced. It comes down fundamentally to the issue of principle. If it is right that all the evidence is that cold calling has been deeply damaging for the elderly, for the vulnerable, for those at a time of crisis in their lives, such as the Port Talbot workers and now, dare I say it, Carillion workers, and for business, then in those circumstances the practice has to end, full stop. The difference between the two new clauses is that we are saying precisely that with new clause 9. While the Government take some steps in that direction with new clause 6, the reality is that this unacceptable practice will continue and is likely to continue to grow.

The Minister talked about penalties handed out thus far of £3 million, but it is a billion-pound industry of abuse. We therefore believe it to be right to send that unmistakeable message so that never again will those people, particularly those at a time of crisis in their lives, fear that supposedly friendly phone call that time and again leads them to make disastrous decisions with disastrous consequences. Our intention is to press new clause 9 to a vote.

Question put and agreed to.

New clause 6 accordingly read a Second time.

Question put, That the clause be added to the Bill.

--- Later in debate ---

[Guy Opperman]

Although the Committee has finished earlier than programmed, I think it is fair to say that the Bill has received thorough scrutiny from hon. Members in all particular ways. Some measures have been more scrutinised than others, even though they were not particularly on the amendment paper as appropriate for scrutiny.

I put on the record my thanks to your good self, Mr Rosindell, and also to Mr Stringer for keeping us moderately in order and for running the sessions so smoothly. I also thank Hansard, the Doorkeepers and the Clerks for enabling us to get through the business so efficiently. On behalf of my hon. Friend the Economic Secretary to the Treasury and myself, I thank the multitude of officials who have kept us in order. I also thank the hon. Member for Birmingham, Erdington, for the Opposition, and the hon. Member for Paisley and Renfrewshire South, for the Scottish National party, for the constructive way in which they have engaged with the debate. We believe we are taking forward a Bill that all parties fundamentally support, and doing the right thing. I look forward to continuing any of those further discussions on Report.

[Jack Dromey]

To respond briefly, I echo those thanks to all who have played their part in the passage thus far of the Bill, initially through the other place and then through the House of Commons.

I will make two points. First, as I said on Second Reading, this is a good Bill and a welcome step in the right direction. The establishment of the SFGB is welcome indeed. Crucially, we now need to make it effective at the next stages. In Committee we set out, as we said on Second Reading, to further strengthen the Bill and to inject what I called a “sense of urgency” into certain of the provisions contained in the Bill.

Secondly, I hope the Government will reflect on what has been said in respect of both cold calling and default guidance on Report. In conclusion, it would be churlish not to recognise that this is a welcome step in the right direction. I thank both Ministers concerned for their constructive engagement. Would that that was always possible on all occasions on all issues with those on the Government Front Bench. Having said that, it would be churlish indeed not to reflect that engagement. I hope the Ministers accept on Report the overwhelming logic and power of argument in respect of cold calling and default.

[The Chair]

I thank the Minister and the shadow Minister for their comments, and can I say what a pleasure it has been to chair this Committee?

Question put and agreed to.

Bill, as amended, accordingly to be reported.

Public Sector Pay

Jack Dromey Excerpts

Monday 4th December 2017 Westminster Hall

[Jack Dromey (Birmingham, Erdington) (Lab)]

Workers have suffered the longest stagnation of wages since a royal prince was about to get married—Prince George, the son of Queen Victoria—when Disraeli and Gladstone were in No. 10 Downing Street and trade unions were illegal, 150 years ago. The hardest hit have been public servants, with a 4.4% increase since 2010 against a background of a 22% cost-of-living increase.

Who are the public servants we are talking about? The Unison home help I met last year who was buying Easter eggs—“Is the council paying for them?” I asked, to be answered, “No, I am buying them myself and taking them around to all the people I care for, because some of them never see anyone else from one month to the next.” Tracey the neonatal intensive care nurse who nursed little Liam, who died seven times, back to life. The headteacher, teaching assistant and teacher in Kingstanding who were rescuing children from desperate poverty by turning around their prospects. They took one particular young boy from the bottom of the class to the top, despite the fact that he came from a household with no carpets, no curtains and no cupboards, with clothes stored in bin bags—acute poverty, but the school turned his life around. The police officers who chased the armed bank robber and recovered for Lucy her children, who had been hijacked by him as he sped away from the police. None so noble as those who care, none so noble as those who save lives and nurse the sick back to health, none so noble as those who provide ladders of opportunity, particularly for the poorest in our society, and none so noble as those who put their life at risk to help save the lives of others.

[Mr Jim Cunningham (Coventry South) (Lab)]

Will my hon. Friend give way?

[Jack Dromey]

Because of the pressure of time, I will not, so that more people can speak.

The reward of those public servants is rising demand, rising workload and falling living standards. That is the impact of not only pay restraint but major cuts to, for example, local government budgets, leading in turn to problems with increments, shift changes and fewer people being employed, so those left having to do more. In our constituencies we can all see the impact on them and their families, as they have to turn to debt advice, pawning household goods, taking out payday loans and food banks, such as the home carer I met in a food bank in my constituency—a proud woman with two kids who loved her job but could not make ends meet without going to the food bank.

If public servants are suffering, so too are public services, through the turnover of labour and the stress on staff—very often, staff complements are stretched to the maximum and those who work in public services are demoralised. There is an impact on local economies, because if public servants get a pay rise, they do not salt away their money into Cayman Islands bank accounts; they spend it in the local economy, creating wealth and jobs. There is a grotesque contrast between the way that public servants are treated and what has been revealed in the paradise papers. This is a Britain where we have a Conservative Government that stand back and allow tax dodgers to get away with it, and then the Prime Minister says during the general election campaign to a nurse that there is no such thing as a magic money tree. Yes, there is, and they grow on the Cayman Islands, Bermuda and Jersey, helping the wealthy to avoid their responsibility to society.

I am grieved because I am from a family of public servants: when my dad came off the roads he was a train driver on the London underground; my mum was a nurse; my Uncle Mick, who lived with us, was a street cleaner. They believed in public services, as the country believes now in public services and public servants, but public servants have been let down by a failing, uncaring Government. It is interesting that a monastic vow of silence has been taken by those opposite, who have been reluctant to get up and defend what their Government are doing. The unmistakable message from this debate is that they may stay quiet but we will not. Labour is on the side of public servants.

[David Hanson (in the Chair)]

A number of hon. Members have withdrawn from speaking, giving us a little more flexibility. Rather than a strict five-minute limit, hon. Members may speak for six or seven minutes.

Budget Resolutions

Jack Dromey Excerpts

Thursday 23rd November 2017 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

After a disastrous election campaign and a party conference that literally fell apart, yesterday’s Budget’s sole purpose was to revive the fortunes of the Conservative party—and maybe to fend off for a time the Tory pack that has been hounding the Chancellor, week after week. But the Budget showed just how out of touch and cut-off from the real world of the economy and from people’s real lives the Chancellor and his Government really are.

Only this morning, the Chancellor said on “Sky News” that the UK economy is “fundamentally strong”. What is strong about an economy in which economic growth has been downgraded to the lowest in the G7 countries? What is strong about an economy in which productivity growth has been revised down to the lowest since modern records began; in which business investment is, to quote the Office for Budget Responsibility,

“significantly lower than…expected in March”;

and in which real pay and living standards continue to deteriorate?

The official growth forecasts from the Government’s own Office for Budget Responsibility were the worst in its history. No Government in modern times has ever presented a set of growth forecasts in which growth in every year is less than 2%. Productivity growth is forecast to have ground to a halt this year, and barely increase next year. That, too, is the worst downgrade in the OBR’s history.

The squeeze on living standards is now so great that the Resolution Foundation estimates that real pay will not return to its pre-crash levels until 2023.

[Jack Dromey (Birmingham, Erdington) (Lab)]

The shadow Chancellor is making a powerful case. The Governor of the Bank of England has said that the last time workers suffered such wage stagnation was 150 years ago, when Victoria wore the crown, Gladstone and Disraeli were in No. 10 Downing Street, Darwin was evolving the theory of evolution and trade unions were illegal. Does the shadow Chancellor agree that under a Labour Government wages go up, but under a Conservative Government—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Before we go any further in this debate, which has only just started, I should explain to the House that a great many people have indicated that they wish to speak this afternoon. Speeches will have to be time-limited and short. It is simply not fair for people to make very long interventions and possibly not stay for the whole debate. [Hon. Members: “Ah!”] I am not suggesting that the hon. Member for Birmingham, Erdington (Jack Dromey) will not. He is an honourable gentleman and knows how to behave in the Chamber. It is perfectly in order and good debating practice for the shadow Chancellor and anyone else to take lots of interventions so that we can have a debate, but interventions must be short and Members must recognise that every minute taken up by an intervention takes a minute off the speech of someone who waits all day to speak. It is a matter of being fair and decent to each other.

Tax Avoidance and Evasion

Jack Dromey Excerpts

Tuesday 14th November 2017 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

I beg to move,

That this House has considered the systemic issues enabling tax avoidance and evasion uncovered by the Paradise Papers.

The actions and the culture of powerful large corporations and of the wealthiest in our society, as revealed in the Paradise papers, constitute a national and international disgrace. What we have learned is that tax avoidance is not just a trivial irritant practised by a small number of greedy individuals and global corporations; it is the widely accepted behaviour of too many of those who are rich and influential. It is clearly taking place on an industrial scale and it has become a scourge on our society. The Paradise papers reveal the enormity and scale of the problem and that is what makes this emergency debate on the issue so important.

Our debate is also urgent and timely because the Chancellor, who sadly is not in his place to hear the debate, is putting the finishing touches to his Budget. I hope that he will read very carefully the views expressed today by Members and reflect them in the proposals he brings to us next week.

[Jack Dromey (Birmingham, Erdington) (Lab)]

There is no such thing as a magic money tree: that is what the Prime Minister told a nurse who had not had an increase in eight years. Does my right hon. Friend agree that there is, and that they grow on the Cayman Islands, in Bermuda and Jersey; and that were the ill-gotten gains salted away by tax dodging to be picked and put into our public services, police officers and teachers would not be facing the sack and we would not be facing a crisis in the health service?

[Dame Margaret Hodge]

I completely agree with my hon. Friend’s remarks, which are very pertinent to what we will be discussing in the debate.

Paying tax is an essential part of the social contract into which we all enter as members of a community. As members of society, we agree to abide by a set of rules and regulations that make all our lives better. One of those rules is that we agree to contribute through taxation into the common pot for the common good.

Paradise Papers

Jack Dromey Excerpts

Monday 6th November 2017 Commons Chamber

[Mel Stride]

My hon. Friend is absolutely right. We hear a lot of talk from the Opposition, but I am afraid that the results of what they did—or, rather, what they did not do—when they had their turn in office speak for themselves.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Does the Minister not recognise that it is obscene that rich people should seek to get even richer by salting away their billions in offshore bank accounts, while working people suffer the longest stagnation of wages for 150 years?