Consumer and Personal Debt

Lord Bishop of St Albans Excerpts

Monday 23rd October 2017 Lords Chamber

[Lord Bates]

The noble Lord is a very experienced politician and will know that it would be impossible for me to comment on interest rate policy, which of course, rightly, is now set independently by the Monetary Policy Committee. A lot of the points he made are correct. These are areas of concern and happening at a time when we have historically low interest rates. There are some areas where things are better—for example, mortgage repossessions are at their lowest level since 1982—but we must do more, particularly in the area of short-term debt, which he referred to. That is partly what the Financial Guidance and Claims Bill, which has its Report stage in this House tomorrow, is about.

[The Lord Bishop of St Albans]

My Lords, a poll commissioned by Citizens Advice in June found that 18% of people with credit cards who had debt problems had had their credit limits increased automatically without them even asking for it, thereby enabling them to take on even greater debt when they were already facing problems. I understand that the FCA is looking into this, but will the Minister ensure that it is asked to bring in much stronger guidelines on this situation to prevent it getting worse?

[Lord Bates]

I was nodding as the right reverend Prelate made his point about this irresponsible lending—it is very tempting—but of course the Financial Conduct Authority was set up to be an arm’s-length body and to advise the Government on what should be done. As he rightly says, the FCA has produced a report, which it is putting out to consultation, and will be announcing some policy changes in this area. Previously, we have seen the introduction of things such as fee-free bank accounts, which are now benefiting 4 million people, and the cap on payday loans—I pay tribute to the most reverend Primate’s role in bringing that about. These are making a practical difference to people and we need action there too.