High-Cost Credit and Debt Management

Lord Sharkey Excerpts

Monday 10th October 2016 Lords Chamber

Asked by

[Lord Sharkey]

To ask Her Majesty’s Government what assessment they have made of the harm to consumers caused by unsolicited real-time promotion of high-cost credit and of debt management solutions.

[Lord Young of Cookham (Con)]

My Lords, the Government have transferred responsibility for the regulation of high-cost credit and debt management firms to the Financial Conduct Authority. This more robust regime is helping to protect consumers better. The Financial Conduct Authority is currently reviewing its consumer credit rules in relation to cold calling, particularly to high-cost credit and debt management, and expects to publish the outcome of the review by the end of the year.

[Lord Sharkey (LD)]

Cold calling is a huge problem. The FCA acknowledges that many of the 30 million cold calls selling fee-paying debt management services were misleading and damaging, and affect the most financially disadvantaged in our society. As the Minister said, the Government promised that the FCA’s review of cold calling will be published before the end of the year. Will the review look at why cold calling for mortgages has long been banned but not for high-cost credit or fee-paying debt management services?

[Lord Young of Cookham]

The answer to the last part of the noble Lord’s question is in relation to what happened with the introduction of the right to buy, back in the 1980s. There was some mis-selling by mortgage brokers, targeting council house tenants who had the benefit of a huge discount. They were not really interested in the creditworthiness of those people as mortgage borrowers and that is why that measure was introduced. On cold calling, the Government will introduce legislation through the Digital Economy Bill which will place, via the Information Commissioner, a statutory obligation on a code for cold calling. In this year’s Budget, additional provision was made to protect particularly vulnerable people from cold calling.