Housing: Rent Payment History

Debate between Lord Bates and Baroness Grender

Wednesday 31st October 2018 Lords Chamber

[Lord Bates]

First, I pay tribute to the work that the noble Lord has consistently done in raising this issue up the agenda. It is indeed something that the Government are taking seriously and they are working with the Financial Conduct Authority and the regulators to see how this can be done. The noble Lord will have noticed the welcome announcement last week that Experian intends to take into account rental contributions as part of credit scoring. That will make a significant difference along the lines that we want—that is, getting the major credit reference agencies to use this data in ensuring that lenders have an accurate reflection of an applicant’s ability to service a loan.

[Baroness Grender (LD)]

My Lords, does the Minister agree that, if a quarter of all households will be renting as of 2021, there must be an end to the bias against people who pay rent rather than a mortgage? With that in mind, will he commit to ensuring that the larger retailers such as Dixons and Argos are included in any initiative that comes out of the Rent Recognition Challenge? Without their participation in addition to that of mortgage lender companies, the poorest renters will continue to be driven into the arms of some of the worst possible lenders just to buy, for instance, white goods.

[Lord Bates]

That is why the consultation is being extended, and it is open to all those parties to feed into it. I gave the example of Experian. By categorising the rental contributions of people in social housing, it was possible for 80% of the 1.2 million people included in the survey to increase their credit rating, meaning that they would have access to lower-cost credit. That is very much what we want, and we believe that, after a long time and a lot of pressure, we are beginning to head in the right direction.

Creditworthiness Assessment Bill [HL]

Debate between Lord Bates and Baroness Grender

Committee: 1st sitting (Hansard): House of Lords
Friday 11th May 2018 Lords Chamber

[Baroness Grender]

My Lords, this is a probing of an airing, to give the technical term. The primary aim of this amendment is to counteract the other amendments tabled by the noble Lords, Lord Naseby and Lord Blencathra. Amendment 5 has been tabled to say, “This needs to happen now”. Its primary point is that the FCA needs to conduct a review and do it now.

I am fully aware that the FCA is at the moment conducting a high-cost credit review. However, its most recent conclusion is that it is,

“prepared to look at solutions designed to increase the choice”,

and encourage the,

“availability of alternatives to high-cost credit”—

in other words, more delay. The main point I want to make as a result of this amendment is that tenants cannot wait any longer. The number of tenants is doubling and government policies are not keeping pace. What we need is the immediate implementation of this, not to wait and have a two-year delay. That is the primary reason for this probing amendment. I thank the noble Lord, Lord Kennedy, the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Jones, for supporting this amendment. It is an amendment to an amendment, so if the noble Lord, Lord Blencathra, withdraws his amendment, it falls by the wayside.

When I had my Private Member’s Bill banning tenants’ fees, the Government used the unintended consequences argument, asked whether the problem could be solved via the market and then rightly changed their mind, but it is taking a very long time for this to come through. I sometimes wish that the Prime Minister had put a date on this, rather than on one or two other items that have come before noble Lords this week.

I take the opportunity of this amendment to say to the Minister that I think he should support the Bill and give it a fair wind, and that the Government Benches should give a fair wind to more time for it so that it has its Report and Third Reading stages and is sent to the other place. The number of tenants is increasing enormously and legislation is not keeping pace. The FCA needs to conduct an urgent inquiry into the people who were described in the debate on the previous group of amendments, and for that reason I am attempting to amend the amendment.

[Lord Bates]

My Lords, I think I can be brief on this group. I thank my noble friend for moving the amendment. This group of amendments concerns the proposal for the Financial Conduct Authority to conduct a review into the experience of rental tenants, with particular regard to their ability to demonstrate their creditworthiness under the existing rules.

I remind the Committee that the FCA recently consulted on proposed changes to its rules and guidance on assessing creditworthiness in consumer credit and has undertaken research on this subject, which carefully considered the factors that firms take into account when making lending decisions. This consultation made direct reference to the current limitations on sharing rental data and the potential for new technology to alleviate them. That is the purpose behind the rent recognition challenge.

Furthermore, in April 2018 the FCA announced that it will conduct a market study on credit information. A consumer’s credit information affects how likely they are to be able to access a range of financial services, including mortgages, loans and credit cards. Consumers may experience harm, such as restricted access to credit, if this information, such as rental payment history, is not shared effectively. The FCA’s aim is to ensure the credit information market works as well as possible to maximise the benefits that it can deliver for consumers. The FCA will also collect evidence to gain a better understanding of the potential for harm in this market and, if necessary, identify remedies. This study will be launched in quarter four of 2018. Finally, the FCA conducts a review of all new interventions as a matter of course and continues to monitor the market for consumer detriment on an ongoing basis.

In conclusion, I put it to the Committee that the need for a further review by the Financial Conduct Authority into this issue is unclear, as the regulator is already carrying out extensive work in this field. The Government’s position on the Creditworthiness Assessment Bill therefore remains unchanged.