Consumer Rights Bill
Debate between Lord Alton of Liverpool and Lord Bishop of Birmingham
The Lord Bishop of Birmingham
My Lords, I am speaking today to the amendment to the Consumer Rights Bill in the name of the Bishop of Truro. He sends his deep regrets that he cannot be in his place today. I extend my and his thanks to the noble Lords, Lord Mitchell and Lord Alton, and the noble Baroness, Lady Bakewell, for supporting the amendment in Committee. Peers from all sides of the House spoke in favour of the amendment.
In recent years, we have seen a massive increase in the use of payday loans and therefore in the advertising of them. As we know, in Birmingham and other parts of the country, access to affordable credit is extremely difficult for vulnerable families. In September this year, the Children’s Society published a report on the effect of advertising and telemarketing of payday loans. The report had a number of findings on which noble Lords spoke in Committee and I would like to remind your Lordships of four of those.
More than half of children aged 10 to 17 are seeing payday loan advertisements “often” or “all the time”. A third of teenagers would describe payday loan adverts as fun, tempting or exciting. These teenagers are significantly more likely than their counterparts to say that they would consider taking out a payday loan in the future. Three-quarters of parents back a ban on payday loan advertisements before the watershed. Parents aged 18 to 24 are twice as likely as those aged 25 to 34 to have taken out a payday loan. This amendment proposes the watershed as the sensible cut-off point to protect children best. The 9 pm watershed is a well known, well rehearsed and established tool for parents, who are able to have some control over how much television their children watch. Even if in the real world we are all aware that some children will watch television after this point, banning adverts of this kind before the watershed would prevent them seeing the majority of them.
In the government response to the amendment in Committee, the noble Baroness the Minister described how new rules on payday loans advertisements with regard to signposting and risk warnings would be significant enough to protect vulnerable families. The rules are welcome but regrettably, warnings, although important in protecting adults, do not always protect children from detrimental impact on their long-term attitudes to debt and money management. In that debate, the noble Baroness also outlined the recent changes to the curriculum which made financial education a statutory requirement. That is another welcome change to help combat the inappropriate marketing practices of lenders. Now we need to make sure that that work is not being undone when children go home from school and sit in front of the television.
The amendment has gained support both in the House and outside. Major organisations have added their names in support of this change. Organisations such as StepChange, the Money Advice Trust and MoneySavingExpert have all seen the point of using the watershed cut-off. I hope that the Government will respect that widespread support and take the opportunity not only to give your Lordships a firm commitment to look at the issues in depth but to consider changing the regulations on scheduling of payday loan adverts.
Lord Alton of Liverpool (CB)
My Lords, in returning to this issue, which I spoke to at Second Reading and in Committee, I first thank the noble Baronesses, Lady Neville-Rolfe and Lady Jolly, for the time that they and their officials have given to it. The meeting that they held with me, the right reverend Prelate the Bishop of Birmingham and the noble Lord, Lord Mitchell, earlier today was certainly helpful.
As the right reverend Prelate just said, this issue has not just exercised Members on all sides of your Lordships’ House at all stages of the Bill but it has also engaged the public outside. I am glad to speak today to Amendment 47, to which I have added my name as a cosignatory. Our amendments are a composite of the amendments which the right reverend Prelate the Bishop of Truro and I moved in Committee and build on that momentum. I hope that they become part of the Bill. However, I recognise that although legislative moments come and are the most important point for parliamentarians to insist on provisions, it is not always possible to achieve legislative outcomes. If that is the case today, I hope that when the Minister comes to reply to the debate, she will be able to say, if the Government agree, as I think they do, with the principles contained in the amendments, how they will be rigorous in ensuring that the advertising industry, the licensing authorities and, above all, the payday loan industry will act in accordance with the amendments, and how we as a House will have the opportunity in due course to hold all those bodies to account.
The Lord Bishop of Birmingham
My Lords, I move Amendment 48 in the borrowed shoes of the right reverend Prelate the Bishop of Truro, which are reasonably comfortable—or were, until about 10 minutes ago. The amendment is in his name and that of my noble friend Lord Alton.
The subject is telemarketing, which is in the same vein as payday loans. The discussion of this amendment in Committee made some strong progress with the issue, and I was pleased to see how many of your Lordships spoke in support of it right across the House. I am sure that many noble Lords will have been irritated by cold calling down the telephone. The Department for Culture, Media and Sport’s current consultation on nuisance calls is an important contribution, and an opportunity to tackle the issue of cold calling as a whole, but this amendment is focused on the specific problems caused by cold calling for high-cost credit.
As the right reverend Prelate the Bishop of Truro said in the previous debate in September, the report Playday not Payday, which has already been mentioned by my noble friend Lord Alton, looked into the devastating effect of payday loans on children and particularly at the use of telemarketing. It found that only 7% of those parents who had never taken out a loan were receiving such calls, whereas 42% of those who had taken out loans previously were receiving calls. Again, younger parents, aged 18 to 24, are most likely to have taken out a payday loan, so the bulk of these calls are going to young parents who are already financially vulnerable. This concerns me greatly. According to a poll of clients of StepChange, the debt charity, one-third of them have received an unsolicited marketing call offering them a payday loan. Although unsolicited calling may have some benefit for consumers in some industries, there is no question but that they are unsuitable for high-cost credit.
In Committee, we discussed how a gap in the regulations is allowing payday loan companies to use unsolicited marketing to offer people payday loans through phone calls and texts. For mortgage products, however, this type of unsolicited marketing is banned by the Mortgage Conduct of Business rules. The Financial Conduct Authority, whose efforts have already been mentioned and which regulates payday lenders, is very clear on this issue. It says:
“Cold calling can expose consumers to high pressure sales tactics which mean that they can end up with an inappropriate or over-expensive product or service. Our investment and mortgage financial promotion rules therefore ban cold calling … unless certain conditions are met”.
The noble Baroness agreed in Committee to look into this issue, and I look forward to hearing her response. With the Financial Conduct Authority now taking over regulation of payday loans, it makes perfect sense to protect people from high-pressure selling of what can, even after the new cap on costs, turn out to be very expensive products.
Lord Alton of Liverpool
My Lords, I second the amendment and support the right reverend Prelate the Bishop of Birmingham in moving it. My name is on the Marshalled List in support of the right reverend Prelate the Bishop of Truro, who tabled the amendment. I will keep my remarks brief because we exhausted many of the arguments in the previous amendment.
One figure that struck me very much is the £8.3 billion estimate of the social costs of debt problems. Putting aside such staggering figures, which are quite hard sometimes to understand, I think about the families I have met over the years who have seen their family life, community life and whole neighbourhoods broken as a consequence of indebtedness and the debt culture. The time that your Lordships spent when this Parliament was first convened considering the crisis we were facing because of the national debt is being replicated in the area of personal debt. Sometimes we overlook the latter because we are concentrating so much, rightly, on the former. However, many families are deeply immersed in debt, which is incredibly destructive of their family life. I suspect that one of the major factors in the breakdown of family life is people taking out all sorts of commitments and debts that they did not fully understand, when they entered into them, they would not be able to honour and meet. It ultimately leads to friction, disagreement, inability to pay and, then, catastrophic results. Anyone who read the front-page report in the Times newspaper this week about the effects of the breakdown of family life in this country on outcomes, particularly for young people, should surely be troubled by these things.
All of us will have experienced high-pressured, targeting salesmanship. It is incredibly frustrating to pick up the telephone and find people trying to sell you yet something else that you do not need, but many of us can easily be susceptible to it. This is a good amendment and one that I hope the Government will feel able to accept today. I am very happy to support the right reverend Prelate.