Financial Services Bill

Lord Naseby Excerpts

Committee stage
Monday 8th March 2021 Grand Committee

I appreciate that this group is a bit of a ragbag of amendments on very different subjects, but I hope that, rather than treat it as a probing amendment, my noble friend will be able by Report either to agree it or come up with some wording that achieves what I seek to achieve. My amendment has been supported by my noble friend Lady Altmann but, as noble Lords will be aware, the Domestic Abuse Bill has taken away a number of Peers from this debate, so she is not able to speak. However, I am grateful to those noble Lords who have sent me messages of support for this amendment; I very much hope we will be able to deal with this situation satisfactorily.

[Lord Naseby (Con) [V]]

My Lords, I am most grateful to the noble Lord, Lord Tunnicliffe, for putting down Amendment 79; I will address that first and then move on to Amendment 93.

I spoke earlier about the difference between home credit companies and payday firms, so I shall not go down that route again. Buy now, pay later reminds me of the old days of hire purchase and some of the challenges that arose then. In many ways, this is almost equivalent to gambling: it plays on people’s weaknesses, who then build up a cycle of debt, as so many noble Lords have said—and lingering in the shadows, ready to swoop, are the claims management companies. Frankly, I do not see why, in this scenario that we all know is happening and will get worse, not least with the huge temptation that will come after furlough is lifted, we cannot act earlier than the next financial year. I do not know the answer to this, but I begin to wonder whether all these payday loans are registered. If they are not, something should certainly be done about that. Finally in this area, we need to ensure that the FCA and the Financial Ombudsman Service are really watchful of the action of the claims management companies when it gets to that state.

Turning to Amendment 93 on access to cash, I thank my friend the noble Baroness, Lady Kramer. As has already been said, 1.3 million people have no access to a bank account. Cash is vital, particularly to the elderly in our society. Covid has made the whole thing even more difficult; the impression has been left that those who carry any notes in their wallet could be carrying Covid. It took some weeks for Her Majesty’s Government to put out clear statements that that cannot happen—it cannot transmit Covid; nevertheless, the rumour was out there and has stuck. The problem then comes down to the many outlets with a sign up in the door or on the cash till basically saying “Cards only”. Indeed, our own refreshment department is card only. The question in my mind is whether it is legal to trade and offer card only. I would have thought the very fact of being given a licence to trade ought to mean they can trade but must accept legal tender in whatever form it is offered.

The Post Office provides a really good service, and I pay full tribute to what it has done in these months of turmoil that we have faced. However, from the little work that I have done, I understand that the people behind the cash machines—those promoting them and the companies involved—state that they are becoming increasingly unviable. If that is the situation, it is very worrying, and I hope that Her Majesty’s Government will take this very seriously and make sure that, one way or another, cash machines are still available to the more than 1.3 million people who do not have bank accounts.

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

My Lords, this group of amendments has an underlying theme of identifying the need for greater consumer protection in this area. I support the noble Lords, Lord Tunnicliffe and Lord Eatwell, in the aims of the much-needed—it would appear—Amendment 79. If he is minded to say that there is no need for such an amendment, could the Minister, in responding to this debate, point to the consumer protection regulations for those using buy now, pay later services? Many of us have seen how the level of personal and household indebtedness has greatly increased due to the lack of regulation in the area identified by Amendment 79.

I will turn to Amendment 101 before coming back to the others. I entirely support the thrust of this amendment in the name of the noble Lord, Lord Stevenson of Balmacara, supported by my noble friend Lord Holmes of Richmond. It seems extraordinary that when consumer protections apply to hire purchase of a vehicle, they do not apply to the circumstances that have been set out and so eloquently identified by the noble Lord, Lord Stevenson, so the time has come for these two Victorian statutes to be replaced. I would like the Minister to give a very good reason why this could not happen and why we cannot simply rely on hire purchase schemes, which give greater protections to the owner and the existing user of a vehicle, for this form of purchase.

Amendments 92 and 93 from the noble Baroness, Lady Kramer and Amendment 136C from my noble friend Lord Holmes identify the need for access to cash. I find cashless societies highly regrettable, particularly for elderly and other vulnerable people; I know there are some in Europe; Sweden is well down this path and Denmark is going down it. On continuing access to cash, the noble Baroness, Lady Kramer, has set out, and my noble friend Lord Holmes set out in his Amendment 136C, why it is extremely important to have proper protections in these areas.

My noble friend Lord Holmes pointed out the role of cash in Covid and why it goes to the heart of financial inclusion. Without wishing to put words in his mouth, I will take his thoughts one step further: I am deeply concerned that the Government propose that the amount available in a contactless transaction will imminently be increased to a maximum of £100. This will possibly enable many people to lose control of their finances, and it will open the door to greater fraud, even where a debit or credit card has not left your possession.

I have been the victim of such fraud. I am delighted to say that the credit card company I was with at the time reimbursed me almost immediately for the loss. What that means is that we are all paying for that loss as credit card or debit card users. The existing limit of £45 is right at the moment; I would hesitate to increase it to £100. I do not know whether there is a bottomless pit for endless frauds or what it means if the limit goes up to £100 on a contactless transaction. Are there limitless reserves? Who pays for the fraud in this regard?

In Amendment 136F, the noble Baroness, Lady Meacher, has identified an area that is timely for review: the regulation of bailiffs and bailiff firms for the purpose of taking control of goods. I would be delighted to hear from the Minister that, even if the Government are not minded to accept this amendment, he will come forward with similar provisions as set out therein and recognise that there is a need for this to take place.

On Amendment 135 in the name of my noble friend Lord Leigh, I think all of us say, “There but for the grace of God go I”. Identity theft is a compelling crime. He set out some modest requirements that the Government would do well to follow.

I find that the amendments in this group have an underlying theme of the need for greater consumer protection. Although they are disparate in what they seek to achieve, each of them has merits to commend it. I very much look forward to hearing the Minister’s response to the excellent case that has been made for each amendment in this group.

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[Lord Sharkey (LD) [V]]

My Lords, Amendments 80 and 88 are probing amendments. Their purpose is to allow the Committee to debate access to Sharia-compliant student finance. I raise this issue because there is no such access.

Noble Lords will know that Islam forbids interest-bearing loans. This prohibition can be and is a barrier to Muslim students going on to attend our universities. I first became aware of this when I visited the Preston Muslim Girls High School as part of the Lord Speaker’s Peers in Schools programme. I talked about the work of the House and tried to answer the girls’ questions. There was one question I could not answer: why was there no Sharia-compliant system of student finance?

Many of the girls came from deeply religious backgrounds and would not be able to accept interest-bearing loans. This meant that they could not go on to university, which they were certainly qualified to do. Ofsted rated their school as outstanding on every measure. The headteacher explained to me that, when tuition fees were low, many Muslim students were able to attend university financed by family and friends, but, since 2012, this had become much more difficult because of the very large increase in fees and the real rate of interest now payable on student loans. The situation became even worse when maintenance grants were replaced by interest-bearing loans.

The Government have known about all this since 2012. In early 2014, the then Department for Business, Innovation and Skills consulted on the issue. The consultation generated an astonishing 20,000 responses. The Government’s report on the consultation noted:

“It is clear from the large number of responses … that the lack of an Alternative Finance product as an alternative to conventional student loans is a matter of major concern to many Muslims.”


This same report also identified the solution: a Takaful, a well-known and frequently used non-interest-bearing Muslim financial product. The Government explicitly supported

“the introduction of a Sharia-compliant Takaful Alternative Finance product available to everyone”.

That was six years ago, and nearly four years ago we passed enabling legislation in the Higher Education and Research Act 2017, but there is still no Sharia-compliant student product available. Over the past five years, I have repeatedly pressed the Government to act. I have spoken in debates in the Chamber; I have asked Questions, oral and written, and I have written directly to the Minister. I last spoke about the issue at length in the Queen’s Speech debate in October 2019. Soon after that, the Minister, the noble Baroness, Lady Berridge, wrote to me saying:

“The position remains the same as when the Government responded to your PQ in July. We will set out plans for implementation as we conclude the Post 18 Review. This will ensure that students in receipt of an Alternative Student Finance package are not disadvantaged compared to other students in receipt of mainstream student support.”


As I had heard nothing further, I emailed the Minister on 4 January this year. I pointed out that, since her letter to me, one more student cohort had entered higher education, and another was now preparing to do so, but there was still no available Sharia-compliant student finance. I asked her for an update on implementation. I asked whether we were still waiting for a formal response to the Augur review and suggested that we should not. I pointed out that the Government had recognised the problem more than six years previously and had had the power to deal with it for four years. I sent this email on 4 January and I have had no reply.

We are having this debate as students are considering their university choices for next September. Once more, there will be devout Muslim students who, though qualified, will not be going to university because of the lack of a sharia-compliant student finance product. It is very hard to understand or excuse the Government’s behaviour over this issue. They know the problem, acknowledge the need to act and have taken the powers to introduce the remedy, yet nothing has happened. It is shameful that the Government have allowed so much time to elapse and that they display such a casual neglect of and disregard for our Muslim community.

At the World Islamic Economic Forum in 2013, David Cameron promised to introduce a sharia-compliant student finance scheme, saying:

“Never again should a Muslim in Britain feel unable to go to university because they cannot get a student loan—simply because of their religion.”


When will the Government finally make good on this eight year-old promise? I beg to move.

[Lord Naseby (Con) [V]]

My Lords, I am absolutely delighted to support my friend, the noble Lord, Lord Sharkey, who has clearly positioned the problem. I have had the privilege of working in Pakistan—which is almost totally Muslim—and India, which has a very significant Muslim population, as well as Sri Lanka, where a big majority of the minorities are Muslim. Locally, they do not seem to have a problem in dealing with this issue; can we not learn from them, particularly Pakistan? We have high commissioners here, so why do we not at least find out from them what the problem is in relation to the UK—and get their help?

This issue is increasing. The sharia families who are really strong in their faith increasingly want to send their children to university—that is part of the philosophy of that faith—and here we are, years down the track, making it very difficult for them. We must do something about it. In towns and cities such as Luton, Leicester and some of the other major ones in the north of England—let alone London—there are students and families who do not know what to do about it. We have to take some action.

It goes further than that, does it not? We want students from overseas; we are seeking them. There are sharia-compliant students from the Muslim fraternity overseas who want to come. I really do not see why this is so difficult to do, so I say to my noble friend on the Front Bench: Her Majesty’s Government need to solve this problem; sit down with the sharia-compliant banks and, if necessary, with the high commissioners to seek their support and help; and solve this problem.

Frankly, it is an embarrassment for any of us who have good friends in that community—as I do and I guess most of your Lordships may well do—to find that potential students are not able to pay their tuition fees and receive student maintenance grants without being penalised or having to find some method to go around the scheme, where the senior mothers and fathers are doing that at all.

As such, I make a plea to my noble friend on the Front Bench: this is not a party-political issue or anything like that—this is just good and straightforward. The problem is known about and has taken years to be solved; can we please take a significant step forward?