Scotland

Lord McNicol of West Kilbride Excerpts

Monday 4th November 2024 Lords Chamber

[Baroness Smith of Basildon (Lab)]

The party opposite may not like it, but the reality is that we have to get the finances of this country on a stable footing, and I can assure the House that that is what we shall do.

[Lord McNicol of West Kilbride (Lab)]

My Lords, what discussions have His Majesty’s Government had with the Scottish Government following the launch last month of the UK industrial strategy? Have the specific Scottish commitments in it, on medicine manufacturing, offshore wind and the Advanced Forming Research Centre in Strathclyde, been welcomed by the Scottish Government?

[Baroness Smith of Basildon (Lab)]

My Lords, if they have not, they should be. The industrial strategy is the core of our mission for economic growth, and the meetings so far have been very positive. We have published the Green Paper, which will kick-start our programme on this. It is a modern industrial strategy for the days and years ahead for this country. It will be published next spring, and it will be in line with the multiyear spending review. Unless we take advantage and make the most of growth across the whole of the UK, we will deny the people of Scotland and of this country the benefits of a strong economy that they deserve.

Financial Services Bill

Lord McNicol of West Kilbride Excerpts

Report stage
Wednesday 24th March 2021 Lords Chamber

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, the next speaker is the noble Baroness, Lady Bennett. The speaker after her, the noble Baroness, Lady Morgan, has withdrawn, so the speaker after the noble Baroness, Lady Bennett, will be the noble Lord, Lord Davies.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Stevenson of Balmacara, and I offer my thanks for his support for the concept of Amendment 12, to which I shall speak. It appears in my name and is kindly supported by the noble Lord, Lord Sikka, and the right reverend Prelate the Bishop of St Albans.

Amendment 12 seeks to secure a discounting of debt for people entering proposed statutory debt repayment plans—something that the noble Lord, Lord Stevenson, noted has already occurred in Scotland. I set out in Committee that that is a large group of people with incomes above those eligible for debt relief orders, but with assets and income generally below those covered by voluntary agreements on bankruptcy. All those other agreements operate in ways that can result in debt being cleared in a relatively short period, much shorter than those to be covered by statutory debt repayment plans. I will not repeat all that detail again.

However, this amendment represents a development of an amendment presented in Committee to secure a fair debt write-down in respect of debts sold on the secondary market. For that initial amendment and this amended one, I pay tribute to the large amount of work done by the Centre for Responsible Credit, from which noble Lords will have received a briefing. While a strong argument exists to support this proposal, entirely legitimate concerns were raised in the debate that the impact of such a move on the operation of the secondary market would need to be properly considered. The noble Lord, Lord True, also raised a concern about the need for equitable treatment of debtors in the scheme. Taking those concerns on board, this new amendment, rather than being prescriptive, is permissive in nature and seeks to ensure that discounts on debt are secured, where appropriate, with the full agreement of creditors.

Amendment 12 recognises that many creditors listed on debt repayment plans, regardless of whether the debt originated with them or they bought it on the secondary market, will often prefer to receive a lump sum as full and final payment as opposed to low levels of instalments spread out over many years. As a result, many creditors already offer a significant discount on the total level of debt if a lump-sum settlement can be made. While the StepChange debt charity has a dedicated team to provide advice to debtors concerning possible full and final settlements, not all debt management plan providers do so. There arises a potential conflict of interest, as SDRP providers are likely to be reimbursed on a percentage basis of the total debt collected. Securing discounts for big debtors would reduce their revenues.

This amendment would therefore ensure that the Government are provided with a power to instruct SDRP providers, where appropriate, to enter into debt settlement negotiations on behalf of debtors entering the scheme. Hopefully this is not needed, but it is important that such a power exists.

In addition, it ought to be possible for SDRP providers to go further. With appropriate funding and regulation, business models could be encouraged that would allow SDRP providers to themselves buy out, and therefore discount, debts registered on their plans. For example, in recent months we have seen instances of debt of £10,000 being discounted by as much as 40% in return for full and final settlement. Enabling such debts to be bought out and subsequently collected by SDRP providers would mean the debtor would have to repay only £6,900, even after taking into account a 15% fee for the provider. It should be possible to achieve a result that is beneficial to creditor and debtor alike. I stress that building this negotiated settlement approach into the SDRP is likely to be welcomed by creditors, who in many cases are already prepared to discount heavily for lump sums in full and final settlement.

It is not my intention to push this amendment to a vote at this stage, but I seek a commitment from the Minister to continue to explore and work on this issue. I hope he can commit to a meeting between the department and interested noble Lords to see how we can take this forward, possibly in regulation.

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[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

The next speaker after the noble Lord, Lord Holmes, will be the noble Baroness, Lady McIntosh of Pickering.

[Lord Holmes of Richmond (Con) [V]]

It is a pleasure to speak to this group of amendments, and I declare my interests as set out in the register. I congratulate the noble Lord, Lord Stevenson, on the way in which he introduced this group, and on all the work that he has done in this area, not least with StepChange. More than a step change, he has done more than many marathons around this subject. Not just your Lordships’ House, but the nation, is in his debt for the work he has done on debt.

I also thank the Minister for his engagement throughout the Bill. I know that he is completely committed to this area, and I congratulate him on the engagement and the time he has spent with me and other noble Lords. It is safe to say that this is an issue that will run longer than this Bill. As with so many other issues, Covid puts a new lens on debt, and enables more people to understand that it is not necessarily just for others. Potentially, with a slight twist of circumstance, we are but a heartbeat, or a breath, away from being in tough financial straits. I congratulate the noble Lord, Lord Stevenson, and I look forward to hearing the response from the Minister.

Integrated Review

Lord McNicol of West Kilbride Excerpts

Wednesday 17th March 2021 Lords Chamber

[Baroness Evans of Bowes Park (Con)]

Sorry, 0.7%— I apologise.

We are acting compatibly with the International Development Act and will set out more detail on steps in due course. I remind the House that we remain a world-leading aid donor and will spend more than £10 billion this year to address poverty, tackle climate change, fight Covid and improve global health. This year, we will continue to be the second-most generous ODA-spending country in the G7 as a percentage of our national income.

The noble Baroness asked about the VSO. I am afraid that all I can say is that at this point no decisions have yet been made on the volunteering for development grant. She also asked about the advanced research and invention agency, which will be operational from 2022. We will invest at least £800 million to set up this body, which will focus on high-risk, high-reward research and have significant freedom to experiment with funding models. Its structure and operating model will empower scientists to make funding decisions and start and stop projects quickly. Of course, as the legislation comes through this House, there will be plenty of opportunity to discuss some of the issues she raised on it.

Both the noble Lord and the noble Baroness talked about defence spending. We are increasing our defence spending by over £24 billion over the next four years, which is £16.5 billion more than our manifesto commitment. We are certainly investing in defence. There will be no Armed Forces redundancies during any restructuring, but the Army will be transformed to meet the threats of the coming decade. Our soldiers will have some of the best equipment in the world, including new vehicles, drones, electronic warfare and cyberspace capabilities. Next week, I think on Monday, the Secretary of State for Defence will set out those plans and your Lordships’ House will have the chance to look at them when they are published.

Both the noble Baroness and the noble Lord talked about nuclear weapons. As they say, the review details our intent to increase the limit of our overall nuclear weapons stockpile to no more than 260 warheads. This is a ceiling, not a target, and it is not our current stockpile number; we will continue to keep this under review. We remain fully compliant with the non-proliferation treaty and absolutely committed to the collective long-term goal of a world without nuclear weapons. However, in the review, we detailed some of the possible areas that might affect us in future—notably, for instance, the potential for the development of technologies that could have a comparable impact to weapons of mass destruction.

Finally, the noble Lord asked about trade and the figure of 80%. As he rightly said, we aim to secure agreements with countries accounting for 80% of the UK’s total trade within three years. So far, we have secured trade agreements with countries worth 67% of total UK trade in 2019 and, in addition to the agreement that we signed with the EU, we have secured FTAs with 66 non-EU countries. We have also applied for accession to the CPTPP.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, we now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

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[Baroness Evans of Bowes Park (Con)]

NATO certainly remains the cornerstone of our defence and we are exceeding our NATO spending commitments, now at 2.2% of GDP. That cements our position as the largest defence spender in Europe and the second largest in NATO. I have already answered several questions on nuclear. As I say, we take our commitments to NATO extremely seriously. It is the cornerstone of our defence.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

the noble Baroness, Lady Chalker, has withdrawn. I call our final question from the noble Baroness, Lady Goudie.

[Baroness Goudie (Lab) [V]]

My Lords, I welcome the review at long last. Despite MPs raising concerns about Beijing—its actions in Hong Kong and those against the Uighurs—the Prime Minister warned against a new cold war in China. It has emerged that Foreign Secretary Dominic Raab told officials that the UK would strike trade deals with countries, even if they did not meet our standards on human rights. Also, what is meant by “girls’ education”?

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[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, we have completed all the Back-Bench questions. We shall take just one minute to rearrange the seating and then we will carry straight on with the next Report stage.

Financial Services Bill

Lord McNicol of West Kilbride Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear face coverings except when seated at their desks, to speak sitting down and to wipe down their desks, chairs and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.

I will call Members to speak in the order listed. During the debate on each group I will invite Members, including Members in the Grand Committee Room, to email the clerk if they wish to speak after the Minister, using the Grand Committee address. I will call Members to speak in order of request.

The groupings are binding. Leave should be given to withdraw amendments. When putting the question, I will collect voices in the Grand Committee Room only. I remind Members that Divisions cannot take place in Grand Committee. It takes unanimity to amend the Bill, so if a single voice says “Not Content” an amendment is negatived, and if a single voice says “Content” the clause stands part. If a Member taking part remotely wants their voice accounted for if the question is put, they must make this clear when speaking on a group.

Amendment 99

Moved by

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[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

I have received one request so far to speak after the Minister. I call the noble Baroness, Lady Bowles of Berkhamsted.

Financial Services Bill

Lord McNicol of West Kilbride Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 24th February 2021 Grand Committee

[Lord Bruce of Bennachie (LD) [V]]

My Lords, that was a powerful speech by the noble Lord, Lord Sikka, and clearly, a lot must be addressed. I served on the EU Financial Affairs Sub-Committee and the Treasury Select Committee, and currently serve on the EU Services Sub-Committee. Therefore, I am well aware of the contribution the sector makes across the UK.

The UK helped to shape the regulations and rules for the EU, but we have now left. The sector has consistently argued that a reputation for high standards and effective regulation is important to the confidence the world expresses in the UK’s financial institutions—notwithstanding the failures that have occurred. The combination of the European Parliament and the UK Parliament ensured that regulators have been accountable. I do not claim to be a technical expert on what is a complicated sector, but I recognise the dangers of regulation becoming an unaccountable closed book.

I support the case for a properly resourced specialist joint committee to ensure that regulators are held accountable, not so much on technical detail but in terms of a prudential framework and overall direction. That would be in the interests of the regulators and government Ministers as well as those who depend on a well-regulated and reliable sector. I share the concern that what the Government are trying to do will ultimately bite back if there has been no proper parliamentary oversight in a future scandal. The Government and the regulators will have nowhere to hide, but that will be very little comfort to people who may suffer from regulation failures.

Financial services are distributed throughout the economy. People often refer to the City of London, but we know that jobs and activities are distributed throughout the UK and have been growing in all the devolved Administrations. Edinburgh is the UK’s most important financial centre and one of the most important in Europe. According to TheCityUK, financial services contribute £13 billion, or 9.4% of GVA, to the Scottish economy. More than 160,000 people are employed in financial and related professional services, which is nearly 6% of Scotland’s national employment. The sector includes banking, fund management, insurance, life assurance and pensions, asset servicing and professional services.

Interestingly, Scotland accounts for 24% of all UK employment in life assurance and 13% of all banking employment. Given that Scotland has 8.5% of the population of the UK, this is clearly disproportionately important. According to Scottish Development International, there are more than 2,000 financial services businesses, supported by 3,650 professional services firms. Scotland’s financial and professional services exports account for 40% of all Scottish services exports.

Having said that about Scotland, tens of thousands are employed in the sector in Wales and thousands in Northern Ireland, and the number is growing in all the devolved areas. My Amendment 137 takes this into account and seeks to ensure that the devolved Administrations are consulted about any proposed changes in financial services regulations. It is clearly in the interest of the sector to have clear and common regulations across the United Kingdom, which is why this amendment looks for consultation only. It merely seeks to ensure that any factors of particular importance to a devolved Administration are, as far as possible, accommodated. I can see no conceivable advantage to financial services companies to diverge from UK regulation. After all, as the figures I cited show, a significant part of the financial services sector in Scotland is serving the whole UK market. The last thing it needs is a distracting push separating it from its customers, either by erecting barriers at the border or by promoting an alternative Scottish currency, which would undermine the raison d’être of serving the UK from Scotland, or a “sterlingisation” agenda that would put huge pressure on the public finances in Scotland.

My amendment seeks to avoid any unintended negative consequences. It is not intended to cause delay or to encourage special pleading. Given the particular importance of Scotland’s role in delivering life assurance and banking, it is surely right that any changes being considered to regulations affecting these sectors are not proceeded with until appropriate consultation has taken place.

That said, it is also important to recognise the role of professional support services, given Scotland’s distinctive legal system and, for example, accounting qualifications. The expertise that exists in Scotland should in any case surely be drawn on to inform regulations if and when changes are being considered. I share concerns that the Government are proceeding to build an architecture that lacks an adequate parliamentary dimension. It is perfectly reasonable to ask the legislatures of the devolved Administrations to be involved in contributing to the shaping of regulations, at least in their broad prudential thrust.

I look forward to hearing what the Minister has to say. I hope he will recognise the force of the arguments put by noble Lords about the need for a significant and effective parliamentary dimension and a recognition that the devolved Administrations, especially Scotland, should be able to contribute constructively and positively to that outcome.

[Lord McNicol of West Kilbride (Lab) [V]]

My Lords, one of the joys of being at the end of such a large group of amendments and a long speakers’ list is that very much of what needs to be said has already been said, so I will be brief.

The contributions from across your Lordships’ Committee, from the noble Baronesses, Lady Noakes and Lady Bowles, and my noble friend Lord Davies, outlined the importance of parliamentary and democratic oversight and the different levels and ways of delivering it. The contribution of the noble Lord, Lord Holmes, on the right levels of oversight also helped move the debate on.

The balance between regulatory authorities’ powers and those of Parliament is critical. My noble friend Lord Sikka clearly outlined in detail many of the failures of the regulators and of the FCA, so getting the levels right is critical. I add my support for those amendments that I am pushing forward. I look forward to the Minister’s response and to how we move this forward to Report and Third Reading.

[The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)]

The right reverend Prelate the Bishop of St Albans has withdrawn, so I call the next speaker, the noble Baroness, Lady Kramer.

Covid-19: Road Map

Lord McNicol of West Kilbride Excerpts

Tuesday 23rd February 2021 Lords Chamber

[The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)]

I thank the noble Baroness and the noble Lord for their comments and for their broad welcome of the road map. I will now attempt to answer some of their questions.

The noble Baroness asked about vaccinating teachers. As we have said, we have kept this under review. As both the noble Baroness and the noble Lord will know, the JCVI advises that the immediate priority for the vaccination programme should be to prevent deaths and to protect health and care staff, which is where the prioritisation has been made. Based on the latest evidence, PHE has advised that the risks to education staff are similar to those for most other occupations and that occupational risk is not the only factor driving increased infections and the risk of mortality for certain groups. I assure the noble Baroness that work has been done in this area. The JCVI will look again at the prioritisation after phase 1 and we await its advice on that.

Both the noble Lord and the noble Baroness asked broader questions on education. In response to the noble Lord, I think that we all agree that there is clear evidence that the extended time without face-to-face teaching has been extremely detrimental for young people. We believe that with the vaccine rollout, and on the basis of our assessment of the current data against the four tests, all pupils and students in all schools and further education settings can safely return to face-to-face education from 8 March. That is why we have made that decision and why it is the first big step that we are taking. Schools have already worked extremely hard to implement a range of protective measures; indeed, since January, schools have conducted 3 million rapid tests. Of course, schools have still been able to take the children of key workers and others, so they have been able to start this regular testing, admittedly with fewer pupils, and they have processes in place.

I say to the noble Baroness that, in addition to that testing and the already established rapid testing regime, we will introduce twice-weekly testing of secondary school and college pupils, initially on site and then at home. Teachers in primary and secondary schools and further education will have twice-weekly asymptomatic testing and we will offer all schoolchildren’s households, including members of their support and childcare bubbles, and those who work in the proximity of schoolchildren free twice-weekly tests. Noble Lords will also be aware that we are temporarily recommending the use of face coverings in classrooms unless the two-metre distancing rule can be maintained. As we have said, schools were always safe and we believe that all these measures will help with the interaction and contact issue that led us to have to close schools before.

The noble Lord, Lord Newby, asked about the dates in the road map. He is absolutely right that we will review the data against the tests before taking each step. Because it takes four weeks for the data to reflect the impact of the changes and we want to give a week’s notice, there will be at least five weeks between each step. The Chief Medical Officer has been clear that moving any faster before we know the impact of each step could increase the risks, so we intend to keep five weeks between each step at a minimum.

Both the noble Lord and the noble Baroness asked about the £500 test and trace payment for those on low incomes who have to self-isolate. We are continuing this scheme and, in this announcement, have extended its eligibility to the parents of children who are isolating.

The noble Baroness asked more broadly about economic support for a range of groups and businesses. I reiterate what the Prime Minister said yesterday: we are committed to doing whatever it takes to support the country through Covid. Details of the next phase of the plan for jobs and the additional support for businesses and individuals will be provided in the Budget next week. The announcements at the Budget will reflect the steps set out in this road map, ensuring that as restrictions ease and the economy gradually and safely reopens, the level of support for businesses and individuals is carefully tailored to reflect the changing circumstances. I remind noble Lords that we have put in place one of the world’s most comprehensive economic responses to the pandemic, so our support will continue.

The noble Lord asked about the May elections. He will be aware that we published a delivery plan setting out how polls can be delivered in a Covid-secure way. We will publish further guidance shortly for candidates, their agents and political parties on campaigning during these elections.

The noble Lord also asked about social care. He said, rightly, that from 8 March care home residents will be allowed close contact indoors with one named visitor—something that I know is good news for everyone. He asked about the wearing of PPE. As he rightly said, with the vaccination programme having been rolled out in care homes, every resident in a care home has been offered a vaccination but, balancing the risks, we still believe that the right approach is to be cautious. At step 2 of the road map, we will take a further decision on extending the number of visitors. We all appreciate the noble Lord’s comments, so we will obviously look at extending contact and so on in care homes at every step of the way.

I will have to write to the noble Baroness about her question on the action we are taking in relation to courts. I entirely agree with her suggestion that we need to develop a road map for returning to normality in Parliament. Through the commission and the usual channels, we will work extremely hard with the administration to begin developing that immediately, while of course keeping in step with the situation more broadly.

The noble Lord asked about the review of social distancing. He is right that this will be completed ahead of step 4—that is, before 21 June. However, in the light of the increased number of vaccinations being delivered, we will also talk to PHE about whether further mitigations can be used—for instance, in the Chamber—to allow us to move forward before then. Obviously there might be other things that we can use, such as the one-and-a-half-metre rule, which we have not really been able to implement here, and face masks. I cannot make any promises but, along with the noble Lord and, I am sure, the rest of the commission, we will talk to PHE about what we can do.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

We now come to the 30 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

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[Baroness Evans of Bowes Park (Con)]

I thank my noble friend for his question and continued support of rugby league, which I know is very dear to his heart. As he will know, DCMS and BEIS have been working with representatives from industry and civil society to explore when and how events with larger crowd sizes and less social distancing will be able to return. This is why, over the spring, we will run a scientific events research programme, which will include a series of pilots that will start in April. We will then bring the findings from across different sectors and settings to determine a consistent approach. We hope that the outcome of the work is that we will be able to lift restrictions on these events and sectors, as he said, as part of step 4, which will be on 22 June at the earliest.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

I apologise for missing the noble Baroness, Lady Brinton, whom I now call.

[Baroness Brinton (LD) [V]]

My Lords, I return to my noble friend Lord Newby’s question about self-isolation. Australia and New Zealand give a straight- forward grant, set at minimum wage, for those self-isolating and quarantining, with no means testing. Their results have been outstanding, with a very high compliance level; people do not have to choose between putting food on their tables and isolating. Given our low levels of compliance, should not the Government move to a non-means-tested grant, as a tool to succeed in lifting lockdown, as a matter of urgency?

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[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

The noble Baroness, Lady Stroud, has scratched, so I call the noble Baroness, Lady Doocey.

[Baroness Doocey (LD)]

My Lords, self-catering accommodation can open from 12 April, but only if there are no shared facilities. Camping grounds cannot open because they have shared toilet blocks. Pubs can also open from 12 April, for those people sitting outside, and those people can use the pub’s toilets. Could the Leader explain why it is considered safe to use a shared toilet in a pub but not in a camping site?

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[Baroness Evans of Bowes Park (Con)]

I can say to my noble friend that there will be a review on international travel. The Department for Transport will be leading a successor to the Global Travel Taskforce, working with the industry to develop a framework that can facilitate greater travel while still managing the risk from imported cases. That taskforce will report on 12 April with recommendations aimed at facilitating travel as soon as possible, although not before 17 May, while still managing the risk from imported cases and variants.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, the time allocated for Back-Bench questions has elapsed and we have been able to get through them all. There is no need to adjourn the House. We shall take one minute to refresh the seating and get the Minister in and then move straight onto the next Motion.

Financial Services Bill

Lord McNicol of West Kilbride Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 22nd February 2021 Grand Committee

[Lord Holmes of Richmond (Con) [V]]

My Lords, it is a pleasure to take part in this first group of amendments, and I congratulate the noble Lord, Lord Sharkey, on the way he introduced it. There could barely be a better amendment to start Committee.

In 2017, during the passage of the Financial Guidance and Claims Bill, now enacted, there was much discussion of, and amendments tabled around, a duty of care, with support from all sides of the House. The response then was that the time was not right: we had to get through Brexit and then look at financial rules and regulators in the round. Four years on, with Brexit done, I think the time is more than now to consider duty of care in all its manifestations, as the noble Baroness, Lady Bowles of Berkhamsted, set out.

In saying that, like other noble Lords I am extremely grateful for the briefings and unstinting hard work undertaken by many organisations in this area. It is invidious to single out two, but I will, not least the Money Advice Trust and Macmillan Cancer Support. Duty of care was an issue in 2017; it was an issue way before that. The Covid crisis has not brought about the need for a duty of care; it has merely shone the brightest and starkest of spotlights on the issues right across the financial services sector.

It is difficult to put it any clearer than this, from a client of Macmillan Cancer Support in one of her darkest moments: “It felt like I was fighting my bank as well as fighting cancer”. Fighting my bank as well as fighting cancer—that is a more than good enough reason to think extremely carefully about how to bring about a duty of care. That one individual speaks for hundreds of thousands.

My Amendment 129 in this group seeks to introduce rights of action for SMEs for breaches of the FCA handbook. I believe the amendment would bring clarity and consistency to how the handbook operates. These rights of action are currently available only to private persons but, when we consider this in the round, not least in the world of FS when we think of fintech founders, are the “Ss” of SMEs—micro-businesses—essentially that different from private persons? Of course I understand the concept of the corporate veil and limitation in all its forms but, in essence, when it comes to operating in a regulatory framework, as we currently have, are micro-businesses that different from private individuals, who currently have this right of action?

Imagine this: currently, a micro-business has only the letter of the contract to take action against the bank. This seems wholly unsatisfactory and more than a little asymmetric. The nature of the relationship between a small business and a bank should be much more effectively reflected in the rulebook. Need I suggest some of the ways this may have helped in the past, with Libor, forex, the GRG, and Lloyds/HBOS activities in Reading? In particular, RBS’s global restructuring group was one of the most shameful episodes in this country’s banking history.

Fundamentally, the amendment can be summed up in a simple line: in reality, how can an SME or micro-business take a bank to court? Amendment 129 offers the appropriate level of support and clarity to our SMEs, and consistency in the operation of the rulebook. Our SMEs are the beating heart of our economy. I suggest we use the amendment to put some head alongside that heart.

[Lord McNicol of West Kilbride (Lab) [V]]

My Lords, at this stage I have not put my name to any amendments, but I will speak in support of Amendment 4, tabled by my noble friend Lord Tunnicliffe, and make a few relevant points. Before I start, I make the Grand Committee aware of my financial interests as set out in the Lords’ register and echo the point from the noble Lord, Lord Sharkey, about the imbalance of power between the lender and the individual—a critical point that I am sure we will come back to in Committee.

Low financial resilience and overindebtedness are huge problems for individuals and the country. UK households have nearly £250 billion of outstanding consumer credit debt and more than 42.5 million people have used consumer credit. Those are the figures for 2019, pre Covid. In 2020 and into 2021 the problem has only worsened. The FCA recently found that the number of people suffering from low financial resilience increased by one-third to 14.2 million people in October 2021. That is nearly one-quarter of the UK adult population.

We know that low financial resilience is not just about overindebtedness. It can be caused by a combination of low savings and erratic family income. Erratic income and low levels of savings are not issues that the FCA can solve—government intervention and education are required to tackle those. However, overindebtedness is an issue that the FCA can help to address. Amendment 4 and a number of the other amendments in this group, as well as the later Amendment 8, would give the FCA some of the tools to do so.

As set out by the Government, the FCA has three key functions: protecting consumers, keeping the industry stable and promoting healthy competition between financial service providers. Of those three critical functions, I would like to concentrate on the first, of protecting consumers. Amendment 4 takes that current responsibility and would add to the Bill a clause which would give the Financial Conduct Authority a duty of care and, later, under Amendment 8,

“rules … to promote financial wellbeing”.

These would enhance the FCA’s powers to protect consumers—something which I am sure we all agree is necessary.

Christopher Woolard, chair of the recent Woolard review, said:

“Most of us will use credit at some point in our lives. So, it’s vital that we have a fair market that works for everyone. New ways of borrowing and the impact of the pandemic are changing the market, with billions of pounds now in unregulated transactions and millions of consumers at greater risk of financial difficulty”.


The Woolard report sets out 26 recommendations to the FCA, some on working with government and other bodies to make unsecured credit markets fit for the future. I hope that the Minister and Her Majesty’s Government will look at the amendments tabled and, where those issues and recommendations raised by Woolard align with them, we will see some government amendments or an acceptance of the amendments laid to the Bill.

This is specifically pertinent in relation to “buy now, pay later” products. On 13 January in the other place, Stella Creasy moved an amendment that would have required the BNPL industry to be regulated by the FCA. The proposal was defeated by the Government, by 355 votes to 265. The Woolard review makes the point, on the regulation of the unregulated “buy now, pay later” sector:

“BNPL products which are currently exempt from regulation should be brought within the regulatory perimeter as a matter of urgency. The use of BNPL products nearly quadrupled in 2020 and is now at £2.7 billion, with 5 million people using these products since the beginning of the coronavirus pandemic”.


The report continues by stating that

“more than one in ten customers of a major bank using BNPL were already in arrears. Regulation would protect people who use BNPL products and make the market sustainable.”

Seeing the light, the Minister, John Glen, agreed that Her Majesty’s Government need to act and bring BNPL into the scope of FCA regulation. I was hoping to see a government amendment to this effect, as the noble Lord, Lord Sharkey, said earlier, but I am sure it will be forthcoming at later stages of the Bill.

I also bring to the Committee’s attention an article in the Observer yesterday, Sunday 21 February, entitled “High-cost lenders ‘exploit NHS workers on pandemic frontline’”. The article highlighted a number of individual cases, as well as the alarming and eye-watering interest rates of over 1,300% being charged by some high-cost credit providers.

The article is based on a University of Edinburgh Business School research report, which makes it evident that the signs of financial vulnerability within the NHS workforce are being ignored by high-cost lenders on an industry-wide basis. Overindebted NHS workers are now struggling with unaffordable loans. They did not receive them from unlicensed backstreet lenders: more often than not, they got them through FCA-licensed and regulated high-cost lenders. This is why Amendment 4 is so important in stating

“the general principle that firms should not profit from exploiting a consumer’s vulnerability, behavioural biases or constrained choices”.

--- Later in debate ---

I am not averse to financial services firms helping through their social responsibility programmes, but I believe these amendments take us down the wrong road. I have less concern about Amendment 134, which provides for a review. But, if that were to proceed, it would need to take proper account of the role of schools in financial education and financial inclusion.

[Lord McNicol of West Kilbride (Lab) [V]]

My Lords, I will be brief, as I set out many of my concerns and issues when speaking earlier on the first group.

I support Amendment 8, proposed by my noble friend Lord Stevenson of Balmacara. Before I start, I would like to make the Grand Committee aware of my financial interests, as set out in the Lords register.

As touched on in Amendment 4 earlier, low financial resilience and overindebtedness are a huge problem for both individuals and the country at large. We should all do all that we can, especially under the current circumstances, to push back against those issues.

Either we are saying that there is a problem and we need to do something about it, or we are saying that there is not a problem and we just carry on as before. With the figures and the personal stories of overindebtedness and unaffordable, unsustainable financial predicaments, I believe that there is a problem that does need resolving.

The FCA recently found that the number of people suffering from low financial resilience had increased by one-third to 14.2 million people. That is one-quarter of the UK adult population. |In earlier amendments, we heard a number of noble Lords, and a little from the noble Baroness, Lady Neville-Rolfe, saying that any increase in regulations, bringing in a duty of care or a duty to promote financial well-being, was either not the responsibility of the FCA or, in some earlier comments, would put more costs on individuals in increased fees and on businesses with increased administration. I do not believe that that is the case with the amendment as laid out by the noble Lord, Lord Stevenson. If you look at the text of it—and I understand it is a probing amendment—you see that the power of the FCA to make general rules includes a power to require authorised persons to promote the financial well-being of consumers in carrying out regulated activities under this Act.

I am very new to this sector and I may be a little naive, but I believe that one of the most significant drivers of costs to the industry is from non-repayment or defaulting on loans. We need financial well-being and literacy to be increased. The noble Baroness, Lady Neville-Rolfe, is right that it needs to start in schools and carry on through employment and employers, but that should not preclude the Financial Conduct Authority being able to step in and help. There is a benefit to businesses as well. If financial well-being can be increased, the number of defaults from people falling into indebtedness or failing to pay reduces, thus increasing profitability of a product, then in turn reducing the cost of that product to individuals and businesses. There is a lot in where the amendment proposed by my noble friend Lord Stevenson is trying to take us.

We touched a little on the Woolard review and its 26 proposals, and I hope that we will see a bit more of those. The noble Lord, Lord Holmes, touched on fintech. With the increase in open banking and the ability to look at individuals’ accounts, better and more detailed decisions can be made on how a product or a business moves on. My noble friend Lord Stevenson referred to the University of Edinburgh Business School report, which it carried out for Salad Projects, looking at the health and well-being of NHS workers who had applied for a loan. The report provides a unique insight into their financial lives, based on millions of individual transactions. What came out of that was information about their low financial resilience—the ability of those working in the NHS to deal with a financial shock to their lives. Often it was just a small shock, but they were unable to tap into the bank loans that many of us can take; they were forced into the high-cost credit loans market.

If we have the development and promotion of financial well-being, I hope we will see a reduction in those who are driven into that sector. This amendment will help to deliver that, but it does not preclude delivering that in schools or the workplace. The FCA is a powerful body that can help push it even further.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to support this group of amendments. I take this opportunity to pay tribute to the noble Lord, Lord Stevenson, and my noble friend Lord Holmes for their huge contribution to this field of financial inclusion. I single out the noble Lord, Lord Stevenson, not just for his role on the Front Bench but previously in chairing StepChange. He will be greatly missed from his Front-Bench responsibilities, and I am sure it will not be long before we see him return.

I also congratulate my noble friend Lord Holmes on being indefatigable in his campaigning for financial inclusion and bringing our attention to fintech. I join the authors of these amendments in identifying a need to address this issue, and I hope that my noble friend, in summing up, will answer this point. The noble Lord, Lord Stevenson, has asked for a high-level response, and I shall use that expression later—I like it. Perhaps we might get something more from my noble friend.

No less of an authority than “You and Yours”, of which I am an avid listener—I think there are two compulsory programmes we should listen to, one is that and the other, I have momentarily forgotten what it is, is the one that gives us all the figures and responses—spent the best part of a programme looking at credit ratings. What struck me is that often it is through no fault of an individual that they find that their credit rating has been so badly affected that they can no longer qualify for any credit. It can take months, if not years, to redress this.

I am concerned that if my understanding is correct Expedia is no longer acting for the Government in this regard. Can my noble friend confirm that we are down to two credit rating agencies? Do the Government share my concern that we should address this area of financial inclusion, financial awareness and each of us being aware of what our credit worthiness and credit ratings are? Amendments 8, 9 and 134 have identified issues that are worthy of attention in this Bill and I look forward to the response from the Minister.

Covid-19 Update

Lord McNicol of West Kilbride Excerpts

Thursday 7th January 2021 Lords Chamber

[The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)]

I thank the noble Baroness and the noble Lord for their comments and questions. I wish the noble Baroness a very happy birthday. I hope she enjoys a gin or two later, as I am sure she will. I also fully endorse the comments of my right honourable friends the Prime Minister and the Foreign Secretary about the shocking events in the United States last night.

The noble Baroness asked about data. From Monday we will publish daily data on the vaccination programme, going through the levels of detail that she asked about. Both the noble Lord and the noble Baroness asked about the economic response, quite rightly, and they will be aware that we have put in place one of the world’s most comprehensive responses to the pandemic, spending over £280 billion so far on economic support. Of course, this week, we also announced additional support worth £4.6 billion for businesses affected by the new restrictions.

All businesses in England legally required to close as a result of this lockdown will receive one-off grants of up to £9,000, which will benefit over 600,000 businesses. As more businesses are forced to close by the restrictions, more will also receive the monthly grants, worth up to £3,000, which, taken together, means that businesses could receive up to £18,000 over the next three months if they have been forced to close due to restrictions. That is in no way to diminish the terrible time many businesses are having, but it is further support, and I believe it shows that we will continue to keep the package under review and react to circumstances as and when we can. Of course, I remind the noble Baroness and the noble Lord that we have protected 12 million jobs so far through the furlough and self-employment schemes, both of which have been extended to April.

On the vaccine programme, by the end of the week, we expect there to be 1,000 vaccination centres across the country, with another seven major centres following next week. Both the noble Lord and the noble Baroness asked about community pharmacies, and as more supplies become available and they can administer significant numbers of doses of the vaccine, they will certainly play a role in the programme. We have undertaken months of extensive preparations and significant investment, including £230 million for our manufacturing infrastructure, so that we can ensure that this ambitious programme, as the noble Lord rightly said, is rolled out.

He mentioned the bureaucracy for those wanting to help with the vaccination programme, and he may have heard my right honourable friend the Prime Minister yesterday, when he was asked about this, saying that we will be tackling this as an immediate priority. Of course, we will work with charities and groups across civil society to help deliver our ambitious plan. Once again, the British people have shown their willingness to engage and help to deliver the programmes that we need, by volunteering and other things. We are incredibly grateful to everyone who is doing that on our behalf, and we thank them in advance.

The noble Baroness asked about education. We have bought over 1 million laptops and tablets for disadvantaged young people throughout this pandemic. Over 560,000 have already been delivered, with an extra 100,000 this week alone, and by the end of the week we hope to have delivered 750,000 devices to the most disadvantaged families. We are working with all the UK’s leading mobile network operators to provide free data for educational sites and to deliver 4G routers to families who need to access the internet. Of course, we will continue to work closely with teachers to support them through this difficult time, and we are very grateful for all the work that they undertook over the Christmas holidays in order to provide Covid-secure environments for young people. We know how disappointing it is that, unfortunately, the variant has meant that we have had to take the very difficult decision to close schools in the short term.

The noble Baroness asked about culture. She may well be aware that theatres, although with no audiences, are still able to open for training, rehearsals and filming. Of course, we have created the £1.7 billion Culture Recovery Fund, and, so far, over £500 million of grants have been awarded to the sector. The noble Baroness also asked about support for renters. The measures are currently being reviewed and we will provide an update shortly.

There are a variety of ways in which the NHS can increase its capacity—for instance, through opening further surge beds in existing hospitals, mutual aid, using independent sector capacity and, of course, opening extra capacity in the Nightingale hospitals. I assure her that, around the country, options will be explored and taken up where they are both relevant and necessary across the country.

The noble Lord asked about the test and trace support payments—the £500 for those on low incomes to self-isolate. We have provided £50 million to local authorities delivering this scheme and have made sure that those advised to self-isolate by the NHS app can also access the payment. We have also made available £15 million for discretionary funding for those facing hardship when self-isolating but who are not eligible for the payment. The noble Lord will also be aware that we have made statutory sick pay available from day one.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, we now come to the 30 minutes allocated for Back-Bench questions. I ask that questions and answers be brief, so that we can call a maximum number of speakers.

Business and Planning Bill

Lord McNicol of West Kilbride Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Monday 20th July 2020 Lords Chamber

[Baroness Wilcox of Newport [V]]

My Lords—[Inaudible.]

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

Unfortunately, Lady Wilcox, we cannot hear you. Can we try again?

[Baroness Wilcox of Newport [V]]

Deputy Speaker, can you hear me now, please?

[The Deputy Speaker]

Yes, carry on.

[Baroness Wilcox of Newport [V]]

Thank you. I thank all noble Lords who have spoken in this debate for the many important and apposite points raised. The Government could have gone further in the development of their amendment, as I noted, and thus we tabled our own amendment. I may be one of the most recent Members of your Lordships’ House but I believe it is one of the prerequisites of our work to make those changes. For the record, the Welsh Health Minister, Vaughan Gething, made a manifesto commitment before the introduction of legislation that will follow, under normal process, regarding Wales’s public spaces and smoking in the next Senedd term. We will keep these matters under review and, no doubt, return to the issue within longer-term legislation in the future. I therefore now beg leave to withdraw the amendment standing in my name.

--- Later in debate ---

Amendment 15 withdrawn.

[The Deputy Speaker]

I inform the House that if Amendment 16 is agreed to, I cannot call Amendments 17 and 18 by virtue of pre-emption.

Amendment 16

Moved by

--- Later in debate ---

Amendments 17 and 18 not moved.

[The Deputy Speaker]

We now come to the group beginning with Amendment 19. I remind noble Lords that Members other than the mover and the Minister may speak only once, and that short questions of elucidation are discouraged. Anyone wishing to press this or anything else in the group to a Division should make that clear in the debate.

Amendment 19

Moved by

--- Later in debate ---

[The Deputy Speaker (Lord McNichol of West Kilbride) (Lab)]

We now come to the group consisting of Amendment 53. I remind noble Lords that Members other than the mover and the Minister may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this amendment to a Division should make that clear in the debate.

Clause 12: Removal of powers of court in relation to unfair relationships

Amendment 53

Moved by

--- Later in debate ---

[The Deputy Speaker]

I now call Lord Naseby.

Let us go to Lord German and then we will try to return to Lord Naseby.

[Lord German [V]]

My Lords, I support this amendment, tabled by my noble friend, because, put simply, it would do two things. First, it would put beyond doubt the protection which borrowers of bounce-back loans have against their lenders pursuing punitive action if they default. Secondly, given the relatively low take-up of these important loans, it would give reassurance to companies seeking to use the facility provided by the Government as essential finance to keep them in business and retain employment.

Companies may have been, or are, hesitant to take out these loans for a variety of reasons. For example, they might be worried about repayment, the ongoing viability of their business or whether they wish to continue trading. But to respond to these fears, the Government must assist by providing the maximum level of certainty on what happens if the borrower cannot repay the loan. The guarantee to the lenders is that the Government will bear the cost of defaulting. This is very welcome, but that guarantee is given to the lender and not to the borrower. There is some protection in place to prevent the lender taking further actions against the borrower, but the legislation before us takes away most of the ultimate protections for a borrower—to have recourse to the courts.

My noble friend has outlined these issues in great detail. I am grateful to her for the forensic manner in which she laid out the borrower protection arguments for this amendment. I will not repeat the detail on the missing protections that she has given.

Taking the two reasons I have outlined for supporting this amendment separately, on the first it is clear that many lenders, mostly large high-street banks, will already have banking arrangements with those who are seeking or have taken out these bounce-back loans. In Committee, I quoted examples of this relationship possibly being used to influence the behaviours of lenders. Put simply, they have financial power over their borrowers through that continuing relationship with them. Other lenders, many of them now trying to lend money under these schemes, have difficulty in getting their hands on the 0.5% interest cash that the Government have made available to lend, largely because the big banks will not funnel these funds through to them, on the “Why should we help our competitors?” principle. This means that the big banks will have a bounce-back loans advantage, most frequently with their existing customers.

On the second reason, the Government estimate that many more of these loans will be needed—perhaps four times as many—to protect small companies from going under, given the consequent unemployment that would cause. These loans need to provide protection for the borrower in a way which will not deter them from proceeding. The fallback of court protection from the poor behaviour of the lender provides a higher level of reassurance to borrowers, in line with the current legislation.

I share the Government’s hope that these loans can provide a lifeline to many companies. They are a very good response to the pandemic. This amendment would support the Government’s ambition and strengthen the case for businesses considering taking out these loans by removing the concern that default could lead to unfair sanctions being imposed on them.

--- Later in debate ---

[Baroness Penn (Con)]

I thank the noble Baroness, Lady Bowles, my noble friend Lady Altmann and the noble Lords, Lord Stevenson and Lord Carlile, for tabling the amendment. I also thank them for the discussions that we have had on this matter since a similar amendment was tabled in Committee. I have listened very carefully to the concerns of the noble Baroness, Lady Bowles. I stress at the outset just how seriously the Government take the protection of those who have taken out a bounce-back loan. I will set out what form those protections take, as the noble Lord, Lord Stevenson, asked me to do.

We have integrated significant protections into the Bounce Back Loan Scheme. I point towards the obligations that the scheme imposes on lenders to act honourably. I set out many of those terms in Committee. Loans are capped at 25% of turnover and the interest rate for the scheme is capped at 2.5%. The Government will cover interest and repayments for the first year of the loan. That helps to address the point made by the noble Lord, Lord Carlile, that businesses might not be able to afford to repay the loan now due to current circumstances but, with a bit of time to get back up and trading, will be able to meet those payments in future.

The lender may not levy any fees or interest beyond the fixed interest rate of 2.5% a year, including any fees on default. I reassure the noble Baroness, Lady Bowles, on this point. Lenders are required to adhere to the scheme rules as set out in this agreement. They may use their standard terms and conditions for documenting the loans. This might be where the confusion has come from, but there is no ability to charge any fees or interest beyond that 2.5% a year.

We will get more into the detail of some other protections, but a number of noble Lords raised the question of the balance of fairness in these loans. These loans set out to be a very standardised product. Protections such as no lender levy fees whatever and a fixed interest rate of 2.5% a year are also factors that need to be taken into account when we look at the balance of fairness and include in that the government guarantee at 100%.

Further protections include the provision of clear information before and during the life of the loan, which was an issue a number of noble Lords raised. In response to the noble Lord, Lord Carlile, I say that lenders are obliged to make it clear in the terms of the loans that the protections under the Consumer Credit Act do not apply to these loans. That is also stated up front.

The noble Baroness, Lady Bowles, asked about the question raised at Second Reading on forbearance of these loans. That is provided for in the terms of the guarantee agreement. There must be forbearance on missed payments, allowing the customer a reasonable time to remedy defaults without consequence. There must also be signposting of appropriate assistance where businesses experience payment difficulties.

We come on to the retention of Financial Conduct Authority oversight for debt collection by lenders of loans that would be regulated credit agreements but are exempt by virtue of them being bounce-back loans, and the right for eligible borrowers under the scheme to access the Financial Ombudsman Service to resolve disputes. I will go into more detail on FCA and Financial Ombudsman Service oversight a bit later, because I know noble Lords will want it. A point was raised in our discussions outside the Chamber on the reservation that, despite the specific protections, the unfair loans provisions in the CCA provide a very broad and general protection so that, if some of these protections that we have specified turn out not to be enough or banks might find a further loophole, the broad provisions provide further protections.

I reassure the noble Baroness that there is also a general, overarching commitment in the guarantee agreement. The lenders have an overarching obligation that they must always act in good faith and not behave in a manner that could reasonably be expected to bring the scheme or the guarantor into disrepute, or in a way that contravenes any applicable law or regulation. This includes all actions in respect of servicing and enforcement of the loan. The lender’s performance of such obligations is subject to audit by the British Business Bank, and the obligations of the guarantee agreement are legal, valid, binding and enforceable obligations. Failure to comply with these terms in the guarantee would mean lenders risk not being able to make a claim under it, which would provide an exceptionally strong incentive to firms to conduct themselves properly. I assure the noble Lord, Lord Stevenson, that if such behaviour that contravened the terms of the guarantee agreement were brought to light, the Government would have no qualms about using their power to withdraw the guarantee.

The Financial Ombudsman Service, raised by a number of noble Lords, also has a more general obligation and duty in cases brought to it to make decisions on what it thinks is fair and reasonable in all circumstances of the case. The noble Baronesses will know that in 2019 the Government expanded eligibility to access the Financial Ombudsman Service so that small businesses with an annual turnover of less than £6.5 million and either an annual balance sheet total of less than £5 million or fewer than 50 employees can access the Financial Ombudsman Service. This means that an estimated 99.5% of SMEs can access the Financial Ombudsman Service. I make the point to the noble Lord, Lord Carlile, that for very small businesses that are inexperienced in taking out credit, a free-to-access ombudsman service—rather than a law suit—is often by far the preferred way to resolve a dispute.

As has been previously noted, the collection of debts under the bounce-back loan scheme remains a regulated activity for loans of less than £25,000 to sole traders, partnerships of fewer than four people and unincorporated associations. That means lenders under the scheme must comply with the FCA’s consumer credit conduct of business standards, rules and guidance on arrears, default and recovery in chapter 7 of the FCA’s Consumer Credit Sourcebook, as well as the FCA’s high-level principles, when collecting debts related to those agreements. As the noble Baronesses will know, this protection reflects the position for business lending more broadly and the fact that all business lending over £25,000 is not FCA-regulated.

I say to the noble Baroness, Lady Bowles: it is not that we were restricting FCA regulation of debt collection in bounce-back loans to loans under £25,000. That is the cut-off point—the threshold—where we regulate that lending activity, and that has not been changed in this. What has happened is that when we removed other provisions in the Consumer Credit Act, which we did via secondary legislation, we reinserted or kept the FCA regulation of debt collection for debts under £25,000 but did not extend it, and nor would we. We think that is the right threshold for FCA regulation of activity, as the noble Baroness, Lady Kramer, said.

To address the point from the noble Baroness, Lady Altmann, about limited companies, it is worth noting that the provisions in this clause would never have applied to limited companies. The protections in the Consumer Credit Act do not apply to limited companies and so, by disapplying these parts of the Consumer Credit Act, we are not changing their position in regulation at all.

A few further points were raised. On the point made by the noble Lord, Lord Stevenson, in Committee and again today more broadly about the Consumer Credit Act 1974, he is right to highlight that that legislation dates back nearly 50 years. Through subsequent amendments, it has become increasingly complex and challenging to navigate. That is reflected in the fact that, in addition to Clause 12 in this Bill, the Government used secondary legislation so that bounce-back loans would not be regulated credit agreements and are now exempt unregulated agreements.

We have made some progress in modernising the consumer credit regulation. In 2014, the FCA took over responsibility for regulating consumer credit. Part of the transfer of the provisions in the Consumer Credit Act 1974 was repealed and those provisions were replaced by FCA rules. However, there was more to do and, since then, the FCA has reviewed the remaining provisions and it published its final report into the matter in March 2019. The Treasury has been undertaking a programme of work to consider the FCA’s findings in detail. It is currently focused on our response to the Covid-19 crisis but, once the urgency of the crisis has subsided, the Government hope to set out in more detail the next steps that they will take on the Consumer Credit Act 1974.

The second point that I would like to make is about the impact of this amendment, should it be agreed. Lenders have made over £30 billion-worth of loans under the scheme in anticipation of Sections 140 to 140C of the Consumer Credit Act 1974 being disapplied. Borrowers have entered into those agreements in the knowledge that the usual protections will not apply. I point out to the noble Lord, Lord German, that over 1 million businesses have benefited from this measure, and that take-up is not insignificant.

Lenders have informed us that, should the amendment be agreed, it is likely that they would cease to offer any new lending under the scheme, thus depriving small businesses of the vital finance they need to weather this crisis. I understand the concerns expressed by noble Lords, but it is not possible to be in favour of the Bounce Back Loan Scheme but not in favour of this part of it—a part that has been crucial in getting the lending going.

My colleagues in the other place have been grateful for the constructive discussions that they have had with the Opposition during the development of the scheme and for the agreement that these measures, although extraordinary, were necessary to rapidly provide small businesses—the lifeblood of our economy—with the funding that they have needed in these extraordinary times. In developing the scheme, we have also worked closely with the FCA.

In response to those noble Lords who asked this question, there is an ongoing programme of work to look at the recoveries process for these loans. The Treasury has convened recoveries workshops with all accredited lenders, along with the FCA, the PRA and the British Business Bank, aimed at ensuring a consistent industry-wide approach to the collection and recovery of bounce-back loans. These discussions will follow the customer journey throughout the lifetime of the loan and ensure that lenders understand the type of support that they can provide to borrowers.

The legislative changes already made in secondary legislation and which we are now seeking to make in primary legislation are integral parts of the design and functioning of the scheme. They have been worked through carefully but also at pace, given the urgency with which small businesses have needed this support. The changes have been made alongside targeted protections built into the guarantee and, where possible, regulations. Without this scheme, lenders would not be able to provide the finance at the necessary pace and scale in response to the huge economic disruption caused by Covid-19.

I hope that I have given the noble Baroness reassurance that borrowers have robust protections under this scheme and that she will feel able to withdraw her amendment.

[The Deputy Speaker]

I have received no requests for speakers to come back after the Minister, so I now call the noble Baroness, Lady Bowles.

[Baroness Bowles of Berkhamsted [V]]

My Lords, I thank all those who have spoken in this debate. The noble Baroness, Lady Altmann, reminded us how attractive assets might tempt a bank or that companies’ equipment could be seized when they ended up in default after a period of forbearance. The noble Lord, Lord Carlile, with reference to the Post Office cases, reminded us how bad things can happen and that sometimes things that perhaps start off looking reasonable get very much out of hand. My noble friend Lord German reminded us that companies need the confidence to borrow. Perhaps we need four times as many bounce-back loans as have already been applied for, but they need protection.

Coronavirus Bill

Lord McNicol of West Kilbride Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Wednesday 25th March 2020 Lords Chamber

Schedule 1 agreed.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, paragraphs 2 and 3 of Schedule 2 were omitted from the Bill by mistake. The correction was published yesterday. The question is that Schedule 2, as corrected, be the second schedule to the Bill.

Schedule 2 agreed.

Schedules 3 to 29 agreed.

[The Deputy Chairman of Committees]

My Lords, there is an error in the Marshalled List. “Schedule 29” before Amendment 14 should instead read “After Schedule 29”.

Amendment 14 not moved.