Financial Guidance and Claims Bill [Lords]

Debate between John Glen and Baroness Winterton of Doncaster

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

[The Economic Secretary to the Treasury (John Glen)]

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

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Government new clause 9—Unsolicited direct marketing: pensions (No. 2)—

‘(1) The Secretary of State may make regulations prohibiting unsolicited direct marketing relating to pensions.

(2) The regulations may—

(a) make provision about when a communication is to be, or is not to be, treated as unsolicited;

(b) make provision for exceptions to the prohibition;

(c) confer functions on the Information Commissioner and on OFCOM (including conferring a discretion);

(d) apply (with or without modifications) provisions of the data protection legislation or the Privacy and Electronic Communications (EC Directive) Regulations 2003 (S.I. 2003/2426) (including, in particular, provisions relating to enforcement).

(3) The regulations may—

(a) make different provision for different purposes;

(b) make different provision for different areas;

(c) make incidental, supplementary, consequential, transitional or saving provision.

(4) Regulations under this section are to be made by statutory instrument.

(5) 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.

(6) If before the end of June in any year the Secretary of State has not made regulations under this section (whether or not in that year), the Secretary of State must—

(a) publish a statement, by the end of July in that year, explaining why regulations have not been made and setting a timetable for making the regulations, and

(b) lay the statement before each House of Parliament.

(7) In this section, “OFCOM” means the Office of Communications established by section 1 of the Office of Communications Act 2002.”

This new clause inserts a new power for the Secretary of State to make regulations (subject to the affirmative procedure) banning unsolicited direct marketing relating to pensions. If the power is not exercised by June, the Secretary of State must explain to Parliament why not. This new clause would be inserted after Clause 24.

Amendment (a) to new clause 9, in subsection (1), leave out “may” and insert “must”.

Amendment (b) to new clause 9, in subsection (1), after “pensions” insert

“and prohibiting the use for commercial purposes of information obtained by means of such direct marketing”.

Amendment (c) to new clause 9, in subsection (2)(c), leave out “and on OFCOM” and insert

“, on Ofcom and on the Financial Conduct Authority”.

Amendment (d) to new clause 9, in subsection (2)(d), after “(S.I. 2003/2426)” insert

“or the Financial Services and Markets Act 2000”.

New clause 1—High-cost credit: advice to the Financial Conduct Authority—

“(1) In exercising its functions the single financial guidance body must have regard to the effect of high-cost credit card lending on consumer protection and must produce and publish an annual assessment of any consumer detriment.

(2) The assessment under subsection (1) shall in particular consider—

(a) what level of interest and fees constitute a high-cost credit card;

(b) information provided by high-cost credit card providers to customers, and whether such information allows customers to make informed financial decisions;

(c) the impact of high-cost credit lending on levels of personal debt,

as well as any other factors that the single financial guidance body considers relevant.

(3) If the single financial guidance body considers it to be necessary for consumer protection it must advise the Financial Conduct Authority to impose a limit on the cost of specified types of credit.”

This new clause would require the single financial guidance body to consider the effect of high-cost lending using credit cards on consumer protection and produce an annual assessment of any consumer detriment from such high-cost lending.

New clause 2—Specific requirements as to the pensions guidance function: mid life reviews—

“(1) As part of its pensions guidance and money guidance functions, the single financial guidance body must provide targeted information and guidance for members of the public from the age of 50 to help them make decisions on their financial affairs.

(2) In particular, the information and guidance in subsection (1) shall include information and guidance on—

(a) increasing pension contributions in preparation for retirement,

(b) saving money in preparation for retirement, and

(c) career development and the impact of career development on financial matters including preparation for retirement.”

This new clause provides for the single financial guidance body to provide guidance to members of the public over the age of 50, to prepare them for retirement. These “mid life reviews” would provide guidance on pensions, savings, and career development.

New clause 6—Regulatory principles to be applied in respect of claims management services—

“(1) The FCA may make recommendations to the Secretary of State on regulatory principles to be applied to claims management services.

(2) The matters on which the FCA may make recommendations include, in relation to claims management services—

(a) the duties of authorised persons to act honestly, fairly and professionally in accordance with the best interests of consumers;

(b) the duties of authorised persons to manage conflicts of interest fairly, both between themselves and their clients, and between clients;

(c) other duties of authorised persons related to a duty of care towards their clients.

(3) If the FCA recommends that regulatory principles be applied to claims management services, the Secretary of State may by regulations impose such principles.

(4) The power to make regulations under subsection (3) is exercisable by statutory instrument; and an instrument containing such regulations is subject to annulment in pursuance of a resolution of either House of Parliament.

(5) In this section, ‘authorised person’ has the same meaning as in the Financial Services and Markets Act 2000, and ‘authorised persons’ shall be construed accordingly.”

This new clause would allow the FCA to recommend that the Secretary of State introduces a duty of care which would require claims management services to act with the best interests of the customers in mind.

New clause 7—Assessment of public preparedness for income shocks—

“(1) As part of its strategic function, the single financial guidance body must from time to time publish an assessment of the ability of members of the public to plan for and address sudden reductions in income.

(2) An assessment under this section must consider the impact of the work of the single financial guidance body on the ability of members of the public to plan for and address sudden reductions in income.

(3) The Secretary of State must lay before the House of Commons any assessment conducted under this section as soon as practicable after its completion.”

New clause 8—Ban on unsolicited real-time direct approaches by, on behalf of, or for the benefit of companies carrying out claims management services and a ban on the use by claims management companies of data obtained by such methods—

“(1) The FCA must, as soon as they take responsibility for claim management companies, introduce bans on—

(a) unsolicited real-time direct approaches to members of the public carried out by whatever means, digital or otherwise, by, on behalf of, or for the benefit of companies carrying out claims management services or their agents or representatives, and

(a) the use for any purpose of any data by companies carrying out claims management services, their agents or representatives where they cannot demonstrate to the satisfaction of the FCA that this data does not arise from any unsolicited real-time direct approach to members of the public carried out by whatever means, digital or otherwise.

(2) The FCA must fix the appropriate penalties for breaches of subsection (1)(a) and (b) above.”

Amendment 31, in clause 2, page 2, line 17, at end insert—

“including information about the services offered by credit unions,”

This amendment adds to the objectives of the single financial guidance body the requirement to provide information about credit unions.

Amendment 39, page 2, line 23, leave out from “accordingly” to the end of line 24 and insert—

“(da) to ensure the needs of people in vulnerable circumstances, including but not exclusively—

(i) those who suffer long-term sickness or disability,

(ii) carers,

(iii) those on low incomes, and

(iv) recipients of benefits,

are met and that resources are allocated in such a way as to allow specially trained advisers and guidance to be made available to them,”

This amendment would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what vulnerable circumstances should include.

Amendment 40, page 2, line 36, at end insert—

“(4) The single financial guidance body must ensure it communicates to consumers using its services the difference between—

(a) provision of information,

(b) provision of guidance,

(c) provision of advice.”

This amendment would require the new body to ensure that consumers are made aware of the differences between ‘information’, ‘guidance’ and ‘advice’ so that they can specify what type of services they require from the new body.

Amendment 4, page 3, line 5, in clause 3, at end insert—

“(c) advice to the Financial Conduct Authority on matters relating to high-cost credit”.

Amendment 41, page 3, line 16, at end insert—

“(6A) As part of its money guidance function, the single financial guidance body must make available financial guidance on the use of alternative sources of retirement income, including housing wealth, to enable members of the public to make fully informed decisions about pensions and retirement income.”

This amendment would place a duty on the single financial guidance body to make available guidance on alternative sources of retirement income, such as equity release. This will provide a pathway for members of the public to consider their wider assets, particularly their housing wealth, to make effective decisions about their retirement income.

Government amendment 10, page 3, line 17, leave out subsection (7) and insert—

‘(7) The consumer protection function is—

(a) to notify the FCA where, in the exercise of its other functions, the single financial guidance body becomes aware of practices carried out by FCA- regulated persons (within the meaning of section 139A of the Financial Services and Markets Act 2000) which it considers to be detrimental to consumers, and

(b) to consider the effect of unsolicited direct marketing on consumers of financial products and services, and, in particular—

(i) from time to time publish an assessment of whether unsolicited direct marketing is, or may be, having a detrimental effect on consumers, and

(ii) advise the Secretary of State whether to make regulations under section (Unsolicited direct marketing: other consumer financial products etc) (unsolicited direct marketing: other consumer financial products etc).”

This amendment makes changes to the consumer protection function to make it clearer exactly what it entails.

Amendment (a) to amendment 10, in paragraph (b)(i), leave out “from time to time” and insert

“at least once every two years”.

Amendment 34, page 3, line 34, at end insert—

“(aa) the capability of members of the public to plan for and address sudden reductions in income,”.

Amendment 1, page 3, line 39, at end insert—

“(11) In carrying out its strategic and other functions the single financial guidance body must make and publish an annual assessment of the level of different types of lending across the United Kingdom by district.

(12) The types of lending covered by the assessment in subsection (11) should include—

(a) high cost short term credit,

(b) hire purchase agreements,

(c) conditional sale agreements,

(d) open ended credit,

(e) other secured lending, and

(f) other unsecured lending.”

This amendment requires the single financial guidance body to carry out an annual assessment of the level of different types of lending in different geographical areas across the United Kingdom.

Government amendment 11.

Amendment 8, in clause 4, page 4, line 2, at end insert—

“(2A) The single financial guidance body must, within 12 months of the passing of this Act, advise the Secretary of State on how to most effectively implement bans on—

(a) cold-calling on behalf of, or for the benefit of companies carrying out claims management services or their agents or representatives, and

(b) the commercial use of any data by companies carrying out claims management services, their agents or representatives where they cannot demonstrate to the satisfaction of the Secretary of State that this data was not obtained by cold-calling.

(2B) In this section ‘claims management services’ has the same meaning as in section 419A of the Financial Services and Markets Act 2000.”

This amendment will require the Secretary of State to specifically ban cold-calling and the commercial use of data from cold-calling by claims management companies, in addition to any bans recommended by the single financial guidance body.

Amendment 9, page 4, line 4, leave out “may” and insert “must”.

This amendment will place a statutory duty on the Secretary of State to institute bans on cold-calling on receipt of advice to do so from the single financial guidance body.

Amendment 42, in clause 10, page 7, line 22, at end insert

“and to whether the standards are proportionate”.

Probing amendment. The SFGB’s standards setting powers also need to be matched with principles of good regulation, ensuring that conditions are proportionate to the benefits they are expected to bring. This would bring the Bill (impacting charities) into line standards setting and enforcement powers granted to other bodies (impacting firms) such as those granted to the FCA.

Government amendments 12, 43, 25, 44, 26 45 and 46.

Amendment 2, in schedule 3, page 45, line 8, at end insert—

17A (1) Section 165 (regulators’ power to require information: authorised persons etc) is amended as follows.

(2) In subsection (4) after paragraph (b) insert—

(c) in relation to the exercise by the FCA of the powers conferred by subsections (1) and (3), information and documents reasonably required by the single financial guidance body in connection with the exercise by the body of its functions as set out in section 3 of the Financial Guidance and Claims Act 2018.”

This amendment extends the FCA’s power to require information from authorised persons to include information required by the single financial guidance body for carrying out its functions.

Government amendments 47, 48, 28 and 29.

[John Glen]

It is a great pleasure finally—for the third time of asking, I believe—to have the opportunity to start the Bill’s Report stage. I want to make a positive start to proceedings by covering new clauses 4 and 9, which will allow us to protect consumers from harmful cold calls by enabling us to lay before the House regulations to ban pensions cold calling and introduce bans for other forms of cold calling, if we consider it appropriate to do so.

As I have said previously, I want to ban pensions cold calling as soon as possible, given the profoundly damaging impact that pension scams can have on people’s lives. I have listened to the recommendations of the Work and Pensions Committee, which published a report before the turn of the year on preventing pension scams, as well as to the passionate calls that have been made across the House and in the other place to ban pensions cold calling. I am pleased to present new clause 9, which builds on and improves the clause proposed by the Committee. The Government’s new clause has a wide scope, which means that we can ban all pensions-related calls. Crucially, we do not need to wait for advice from the guidance body before we implement a ban, so we can make good on our commitment to ban pensions cold calling quickly. I hope that the fact that I will have to lay a statement before both Houses if we have not laid regulations before Parliament by June will reassure hon. Members on that point.

I turn to new clause 4. It is clear to me that, too often, significant consumer detriment arises because of cold calling. If we find evidence that people are experiencing detriment as a result of cold calling regarding consumer financial products, we will not hesitate to use this power to protect consumers.

I am pleased to be able to confirm the final part of our approach to protect consumers from cold calling by means of amendment 10. The amendment expands and improves on the consumer protection function. It gives the body powers to publish regular assessments of consumer detriment resulting from cold calling, and to advise the Secretary of State on where further bans should be implemented. The change clarifies the consumer protection function and gives the body a clear mandate to support the Government in preventing harm that results from cold calling. In fact, the Bill has been agenda-setting in relation to cold calling. The amendments that we are discussing will give the Government new powers to ban cold calling in some of the areas that are the most pressing when it comes to protecting consumers.