Financial Services and Markets Bill

Lord Hunt of Kings Heath Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a great pleasure to open the Back-Bench debate by thanking the Minister for her opening address and, like her, welcoming the maiden speeches of the noble Lords, Lord Remnant and Lord Ashcombe, and the noble Baroness, Lady Lawlor. I reassure the Minister that I support the Bill and the intent to modernise our financial services and ensure that the City retains its competitiveness in a global marketplace. However, this has to be done in parallel with measures to promote financial stability, inclusion and consumer protection as well as—I hope—recommitting the Government to making the City the first net-zero aligned financial centre.

Like the Minister, I can concentrate on only three or four aspects of this. First, I want to talk about financial inclusion. How is the Government to address the poverty premium—the extra costs that poorer people pay for essential services such as insurance, loans or credit cards? This is closely linked to the ease of access to cash and banking services, to which the Minister referred. The fact is that the Bill does nothing to protect essential face-to-face banking services, which the most vulnerable in our society depend on for financial advice and support.

Indeed, on this Government’s watch, almost 6,000 bank branches have closed since 2015, yet there is a significant overlap between those reliant on cash—estimated at about 10 million people—and those who need in-person bank support. Those without the digital skills to bank online, people with poor internet connections and people who are unable to afford wi-fi are at risk of being left behind.

The Government have committed to protecting access to cash, but will free access be protected? The key to this is ensuring that the ATM network is sufficiently funded by the interchange fee. Since 2018, this funding has seen successive real-term cuts, which is risking the closure or the conversion of an estimated 37,000 free-to-use ATMs. I believe that the regulator must be mandated to consider the funding of ATMs through legislation in this Bill.

I hope that we will do more to protect people from the buy now, pay later industry. We know that many millions of people are borrowing to pay their mortgages, and to put food on their table and clothes on their children’s backs. A quarter of all buy now, pay later users have been unable to pay for at least one essential item because they are having to make repayments on buy now, pay later products. Many did not realise what they were getting themselves into because buy now, pay later is currently so pervasive on websites. Users have nobody to complain to; they cannot go to the ombudsman if they feel they have been mis-sold this type of credit. I understand that the Government have accepted proposals to regulate, yet regulation has not come. Why is that, and why cannot this Bill be the vehicle?

I turn now to financial fraud. The Bill offers protection for victims of authorised push payment scams but little to address the growing problem of financial fraud. According to the latest figures from the NAO, 41% of all crime against individuals in the year ending June 2022—with an estimated 3.8 million incidents—was actual or attempted fraud. Yet, the number of fraud offences resulting in a charge or summons is pathetic. In the year ending March 2022, 4,816 fraud cases resulted in a charge or summons. Moreover, less than 1% of police personnel were involved in rendering fraud investigations in the year ending March 2020.

I am particularly concerned about the impact on older people. As Hourglass has pointed out, suffering economic abuse as an older person can have really life-changing effects leading to trauma, mental health problems and, in some cases, death. I do not understand why the Government continue to fail to take fraud seriously and why we cannot see a fully fledged fraud strategy. Again, this Bill provides an excellent vehicle for us to ensure that that happens.

Finally, one other area where the Bill could have done so much more is in relation to cryptocurrency. Recent events following the collapse of FTX have shown the risks in the Government’s aim to make the UK a global hub for cryptocurrency assets. It is true that the Bill contains measures to bring stablecoins into the scope of regulation, but surely they could be doing much more. I say to the Minister: overall, the Bill is welcome but it is certainly ripe for improvement.