Arrangement of Business

Lord True Excerpts

Thursday 8th September 2022 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, it is my understanding that in the other place the Prime Minister is leading a debate on the energy crisis and her proposals. As it is a debate and not a Statement, can the Government give some thought and hold discussions in the usual channels to arrange for a debate in government time in this House to discuss this most pressing issue?

As Opposition Chief Whip, I congratulate the noble Baroness on her appointment as Government Chief Whip. She is both a popular and a highly effective Member of your Lordships’ House. I look forward to working with her again.

I thank the noble Lord, Lord Ashton of Hyde, for his service as Government Chief Whip. I always enjoyed working with him; he was kind, courteous and straight in all our dealings. I always enjoyed our conversations that took place many times during the day and even sometimes into the night.

[The Lord Privy Seal (Lord True) (Con)]

My Lords, if I might—unusually—respond on a usual channels question, I should like to thank the noble Lord for his kind words about my noble friend Lord Ashton, which are widely shared, and about my noble friend Lady Williams. I think this poor old man will often need a helping hand to stop him stumbling and I cannot think of a securer colleague than the noble Baroness.

As for the fundamentally important question that the noble Lord poses, which perhaps goes a little wider than the energy question, my right honourable friend the Prime Minister indicated yesterday a set of what she considers the urgent requirements for the country. They may well eventuate in provisions being laid before Parliament, which it would be my duty to make sure your Lordships’ House has the opportunity to discuss. I fully take his point about the nature of the debate in the other place meaning that I am not standing here repeating a Statement on energy. This is a question of fundamental importance, and I can give an undertaking that we will take it away and have those discussions in the usual channels to see how we can accommodate your Lordships’ House.

Government: Ministerial Changes

Lord True Excerpts

Wednesday 7th September 2022 Lords Chamber

[The Lord Privy Seal (Lord True) (Con)]

My Lords, of course I echo the tributes made so eloquently to my noble friend Lady Evans of Bowes Park, which I shall not be able to match. I wholeheartedly add my own, and am only sad that she is not here to hear the warmth of feeling towards her in the House—but I am sure that she knows that, and has known it, and will see it in Hansard.

My noble friend served your Lordships’ House as Leader for six years, and did so with determination, tenacity and always great good humour. I can bear out what was said—that she consistently and forcefully made the case for your Lordships’ House within government. I have to say that, having had the benefit of being on a Cabinet committee with her, I heard some pretty robust language there when she has been defending your Lordships’ House and its place in our national life. She always defended this place. On a personal level, as noble Lords have already said, she has been a source of great support not only to many of my noble friends but to people across the House. She has provided leadership and morale in difficult times.

Even from my noble friend’s earliest days in the House as a Government Whip, as has been alluded to, when she came leaping forward from being a junior Whip, she acted without fear or favour. I remember an occasion when the late Lord Ashdown of Norton-sub-Hamdon was not abiding by the speaking limit in debate. Despite his concerted attempts to continue, the noble Baroness finally quelled him. Anybody who knew the great Paddy Ashdown will know that it was not very easy to quieten him down.

My noble friend’s sheer dedication was very much the reason for her longevity in the role. She was the youngest Leader in modern times and, as the noble and learned Lord said, it was daunting. Imagine being so young and looking all this august and fearful company and having to lead. She was the first Leader to serve under two different Prime Ministers since Lord Shepherd and the longest-serving female Leader, as well as the longest-serving Leader of the House since the first Viscount Addison, who left office in 1951. Even Viscount Addison beat her by only 31 days. To think that she slogged away for six years and then missed that record by only 31 days—I wonder whether she will ever forgive me.

As other noble Lords have said, it has been a turbulent time, with Brexit and Covid and all the more recent events with the war. The House has lived through exceptional times. I totally agree with what the noble Lord, Lord Newby, said about the experience of Covid and the sudden and different ways in which we had to operate, which was not something that many Peers liked. The thing I hated most since I became a Minister was sitting at my table, trying to answer questions.

My noble friend led and she was instrumental in seeing that the work of the House should and must go on. The hybridisation of the House was one of the most dramatic and sudden changes in history. She led that and led the way in ensuring the House could function safely and embrace the technology and, while many of us were comfortable at home, she and her team were here in Parliament every single day that the House was sitting. For that continuity, I think we all owe a debt of gratitude.

My noble friend is always fun to be with, and that is a very important quality in politics. I hope we in this House never forget, for all the gravity and seriousness of the things we deal with, the importance of fun, fairness and respect. She is an exceptionally generous and kindly person, as has been said and as many can testify. I offer, with all others who have spoken, our thanks to her and best wishes for the next chapter of her life.

I would also like to take a moment, as others have, to pay tribute to the outgoing Government Chief Whip, my noble friend Lord Ashton of Hyde. He will hate this because he is not that sort of person, but the role of Chief Whip is not for the faint of heart and he has undertaken it with characteristic compassion and diligence. I know I speak for the whole House when I wish him the very best for the future. We look forward to seeing him around the House—especially on voting days, Henry.

Finally, I thank those from across the House who have spoken to me, sent messages of support and been kind today about my appointment. However, I say emphatically that this is not a time to talk about me, and particularly not a time for me to talk about me—in any case, that is not something I am ever very keen on doing. I will do my utmost, I pledge to noble Lords, to uphold the ethos and traditions of this House that I love. I want this House, on all sides, to be a happy and comfortable place where, for all our differences—passionate and proper differences—every Peer feels that their views are valued. I look forward to working with noble Lords across the House to meet those responsibilities.

Financial Services Bill

Lord True Excerpts

3rd reading & Report stage
Monday 19th April 2021 Lords Chamber

[Lord Tunnicliffe (Lab) [V]]

My Lords, we are grateful to the noble Lord, Lord Holmes of Richmond, for bringing forward these amendments, which would enable individuals to obtain cashback from retail settings without first having to make a purchase. We have not spent a huge deal of time discussing access to cash during the Bill’s passage, which is a surprise given the challenges we face in this area. It is beyond doubt that the Covid-19 pandemic has accelerated the transition to cashless payment, but this does not mean that cash is becoming obsolete. Many millions of people continue to feel most comfortable making physical payments. While small businesses have access to low-cost options for taking card payments, many will still prefer to deal with cash.

While we welcome this initiative, I hope the Minister can briefly touch on the Government’s response to the wider challenge we face with access to cash, such as the continued closure of bank branches. It is also worth noting that, while people may soon be able to access cash more easily, these amendments do not deal with the fact that some businesses have chosen no longer to accept it. That is their choice, of course, but acceptance is as important as access. I urge the Government to accept these amendments, which would be beneficial to an important part of society.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, I join the expressions of sadness at the news of the death of the noble Lord, Lord Judd, such a tireless campaigner for all the causes he held dear. Even though we meet, of necessity, in an almost entirely empty House, it says everything about the noble Lord that one feels that one particular place over there is empty. Our thoughts go out not only to his family, particularly, but to all those in the Labour Party family who were inspired by his example and loved him as a man.

Amendments 37D and 40A seek to facilitate the provision of cashback without a purchase. I say at the outset to the noble Lord, Lord Tunnicliffe, my noble friend Lord Hunt of Wirral and others that the Government will support these amendments. The noble Baroness, Lady Kramer, is able to divine the language of draftsmen even better than I am.

These amendments introduce an exemption for cashback without a purchase, such that it will no longer be a regulated payment service. Under the current legislation, which derives from the EU’s second payment services directive, if a business or its agent, such as a corner shop or supermarket, wanted to offer you cashback without requiring you to make a purchase, it would have to be authorised or registered with the FCA to give you cash from your own accounts. That is a significant burden for even the largest of retailers, let alone small, local shops along the various high streets across the UK.

This amendment removes this requirement; it will take effect two months after Royal Assent. From that point, industry will have discretion to make the service available across the United Kingdom. Where the service is offered, customers will be able to walk into a local business that wishes to participate, such as a corner shop, café or pub, and withdraw cash without having to make an accompanying purchase.

As part of the community access-to-cash pilots, LINK—the UK’s main ATM cash machine network—and PayPoint are already testing a cashback without purchase service in a small number of local stores in Cambuslang, Hay-on-Wye, Burslem and Denny. Indications from this trial are positive, and the Government look forward to the outcomes. This amendment will allow for such initiatives to be rolled out across the UK more easily.

The Government recognise that, as my noble friend Lord Holmes of Richmond said, widespread access to cash remains and will remain extremely important to the daily lives of millions of people across the United Kingdom. Although it was not possible in time for this Bill, I can certainly assure the noble Baroness, Lady Kramer, that the Government have committed to legislate to protect access to cash and to ensure the cash infrastructure is sustainable in the longer term.

The Government published a call for evidence on access to cash in October 2020. This highlighted the potential benefit of facilitating cashback without a purchase through legislation. Cashback with a purchase was in 2019 the second most frequently used method of withdrawing cash in the UK, behind ATMs. As my noble friend Lord Holmes of Richmond told us, there were 123 million cashback transactions, amounting to a total amount withdrawn of £3.8 billion.

The Government’s view is that cashback without a purchase has the potential to be a valuable facility to cash users and to play an important role in the UK’s cash infrastructure. This legislative change, which is possible only now we have left the European Union, would help both to support the availability of cash withdrawal facilities across the United Kingdom, benefiting individuals’ access to cash, and to support local cash recycling. These amendments are therefore a welcome step towards protecting access to cash.

I am particularly grateful to my noble friend Lord Holmes of Richmond, who raised this important issue in Grand Committee, for the constructive way he has engaged with the Government and officials since then on this important issue. I am very pleased to be able to say that the Government are proud to support these amendments. Meanwhile, as I covered in my earlier remarks, the Government are considering responses to the call for evidence and look forward to setting out next steps on legislation to protect access to cash in due course.

[Lord Holmes of Richmond (Con)]

My Lords, I thank all noble Lords who have contributed to this debate on such an important issue. Cash still matters, and it matters materially to millions. I thank particularly my noble friend the Minister for the way in which he and all Treasury officials have engaged with this issue. It is a key part, but, as other noble Lords have rightly identified, only one part, of what it means to have a cash-enabled, easily accessed economy across the UK. It adds to financial inclusion. More than that, it adds to complete social inclusion.

We all need to think innovatively about how we can do more to enable, empower and unleash true financial inclusion across the UK. It matters economically, socially and psychologically. If we can enable it, it can address so many of the issues that have dogged our nations for decades.

Again, I thank all noble Lords who have contributed, and I thank particularly the Minister and Treasury officials.

Financial Services Bill

Lord True Excerpts

Report stage
Wednesday 24th March 2021 Lords Chamber

[Lord Eatwell (Lab)]

My Lords, the measures in this Bill that refer to Gibraltar essentially create a single financial market, and an essential component of a single financial market should be a single registry standard. So I want to ask the Government about their approach to this. When they decided to promote the measures in the Bill in support of Gibraltar, did Her Majesty’s Treasury conduct a review of the Gibraltar registry, and could the Minister tell us the result of that review? For example, could he tell us whether the Gibraltar registry is as transparent as that of Companies House?

Noble Lords will be well aware, after Committee, that my opinion of the Companies House registry is pretty low, in particular regarding its inability to provide a verified register of beneficial ownership, which is at the foundation of the right reverend Prelate’s concern with tax issues. So could the Minister assure us that the Gibraltar registry has a verified register of beneficial ownership, as well as being transparent?

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, I certainly regret, along with others, that the right reverend Prelate was unable to be here to speak to his amendment, but we fully understand the reasons for that. Obviously, the House has great respect for his expertise in these financial matters. We are grateful to the noble Lord, Lord Sikka, for delivering aspects of his speech.

In response to the noble Lord, Lord Sikka, who raised an issue relating to state aid, I should say for the record that the issue he raised is a legacy state aid issue, relating entirely to the period when the UK was a member of the European Union. The Government of Gibraltar have already recovered some of the aid and continue to work to recover the outstanding aid, in compliance with the European Commission’s decision to bring this case to a satisfactory conclusion as fast as possible.

--- Later in debate ---

[Lord Tunnicliffe (Lab) [V]]

My Lords, we welcome the re-tabling of Amendment 11 by my noble friend Lord Stevenson, which provides the Minister with an opportunity to give more detail on the intention behind the Government’s introduction of the statutory debt management scheme. We are grateful to the Minister and his officials for the various meetings that have taken place in recent weeks. We hope that, even once the Bill has passed, there will be opportunities for further cross-party dialogue on issues relating to personal debt, financial resilience and so on.

There was a lively debate on this issue in Grand Committee, and various amendments were tabled by colleagues from across the Committee. Despite the number of amendments, almost all noble Lords were united in saying that the Government must get on with introducing the scheme. Amendment 12 from the noble Baroness, Lady Bennett, co-signed by the right reverend Prelate the Bishop of St Albans, deals with some slightly broader issues relating to problem debt. We hope that the Minister can provide a full response to those points, either now or in writing.

Looking at these amendments and the next group on BNPL and financial exclusion, I am struck by just how important it is to adopt a more holistic approach to personal finance, as proposed by my noble friend Lord Stevenson in his previous amendment on the concept of financial well-being. Helping people with debt has to be important. I have trouble understanding how people cope with that situation. It is the role of the state to provide structures to allow people to take on their debt problems in a managed way. I look forward to the Minister’s response to my noble friend’s amendment.

[Lord True (Con)]

My Lords, I am grateful for the opportunity to respond to the debate. I genuinely thank all noble Lords who spoke in Committee and who have spoken today and, indeed, those with whom I have had the privilege of meeting and discussing these matters of engagement. All the discussions have been useful, and the Government have certainly listened to them. I hope that in my letter which I have placed in the Library of the House and my remarks this evening, I will be able to assure noble Lords that that is the position.

What I have found most pleasing is a sense of unanimity, which is rare in this House, that we are on the right track as regards seeking a scheme of this kind. The SDRP is a new solution for those who are in problem debt. It will provide a revised, long-term agreement between the debtor and creditors. Debtors will be protected from most credit enforcement action and from certain interests and charges on debts in the plan. Following the Committee stage and the valuable discussions I have referred to, I wrote to the noble Lord, Lord Stevenson of Balmacara, the noble Baroness, Lady Coussins, and my noble friend Lord Lucas with further details. The noble Lord, Lord Stevenson, referred to aspects of that letter. However, the Library of your Lordships’ House is not open to everyone, particularly at this time. Given its importance to today’s debate, I hope that your Lordships will indulge me if I take some time to place on public record some of the key commitments set out in it because they are commitments which have been made on behalf of the Government. I also want to ensure that all noble Lords understand the timings the Government are working to.

I spoke in Committee in response to the noble Baroness, Lady Kramer, about the range of support being given by the Government to people at this difficult time, and she is quite right to refer to those difficulties. In the meantime, as we work on the SDRP, the Government are pushing ahead with the implementation of a breathing space scheme that will come into force on 4 May this year. Other voluntary and statutory debt solutions will continue to be available to debtors to consider in the meantime.

I return to the process which has been of interest to many noble Lords. The Treasury is currently drafting regulations for the SDRP and intends to consult on them as soon as possible after the Financial Services Bill receives Royal Assent. As well as preparing the regulations, the Treasury will also need to work with the Insolvency Service and others to implement new IT systems and develop scheme guidance to aid stakeholders in implementing the policy. It is also important, obviously, to give stakeholders adequate time to prepare so that the regime can be implemented properly. Given that, I can confirm that the Government expect the SDRP to be implemented in 2024. In order to achieve that, they will aim to lay the necessary regulations by the end of 2022.

I am sorry that the noble Lord, Lord Stevenson of Balmacara, is disappointed at the specifics of my letter on the timing and, indeed, that has been alluded to by others. However, I will repeat that it is the Government’s clear aim and intent, as the noble Baroness, Lady Coussins, was kind enough to say, to operate on that timetable with the most appropriate dispatch.

As to why the SDRP regulations might not be able to be laid until the end of 2022, the reality is that the Treasury is currently working on their drafting. I have explained that this is a complex undertaking and will require input from stakeholders both inside and outside the Government to finalise before a consultation on regulations can be published. That consultation will in turn need to give a reasonable length of time—we are often criticised for providing insufficient time for consultation—for stakeholders and members of the public to reflect and respond. We must allow sufficient time beyond that to consider the responses properly. Those views, as appropriate, will need to be reflected in the draft regulations before they are laid. The timetable will also need to accommodate the necessary clearances within Government and Parliament for publications and legislation. However, I know that noble Lords on all sides of the House, including on these Benches, wish for the SDRP to be progressed in a timely manner. The Government have certainly understood the strength of feeling among noble Lords on this matter.

I know that the noble Lord, Lord Stevenson of Balmacara, wished also to further understand some of the details of the regime; as he has made clear, that is what his probing Amendment 11 seeks to explore. So I repeat on the public record that the details of the SDRP regime will be set out in affirmative secondary legislation, so Parliament will be able to consider the exact details close to the time. I also reassure noble Lords that Section 7 of the Financial Guidance and Claims Act 2018, as amended by Clause 34 of the Bill, will contain powers to allow the Government to include such features in the SDRP as suggested in the amendment. However, in response to the noble Lord, Lord Stevenson, I will set out further detail on how the Government expect the regime to function.

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Moved by

[Lord True]

13: Clause 34, page 40, line 31, leave out “subsection (5)” and insert “section 7(5) of that Act”
Member’s explanatory statement
See the explanatory statement for the Minister's amendment at page 40, line 14.

Financial Services Bill

Lord True Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

[Lord Tunnicliffe (Lab) [V]]

My Lords, the case for reform in this area has been overwhelmingly made by my noble friends Lord Stevenson and Lord Griffiths, the noble Lord, Lord Sharkey, and the noble Baroness, Lady Kramer. I wish not to delay the Committee any longer, but simply to advise that the Labour Front Bench supports my noble friend Lord Stevenson’s amendment and the generality of those proposed by the noble Lord, Lord Sharkey.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, I acknowledge that the Government have a great deal of sympathy for borrowers who are unable to switch their mortgage, and we are committed to finding practical ways to help them. That is why we have been working closely with the FCA, and I will set out the action that it has taken.

In 2019, the FCA introduced a modified affordability assessment, which allows active mortgage lenders to waive the normal affordability checks for borrowers with inactive lenders who meet certain criteria—for example, not being in arrears and not wishing to borrow more. As a result of this, inactive lenders have been contacting borrowers who have had difficulty with switching, setting out new options that may be available for them on the active market. I am pleased that a number of lenders, including Halifax, NatWest and Santander, have already come forward with options specifically for these borrowers.

More widely, we have taken steps to support those unable to make mortgage payments during the pandemic. Payment holidays have provided vital support for consumers, including those with inactive lenders, with over 2.75 million mortgage holidays granted since March 2020.

However, policy should be based on clear evidence. The FCA’s analysis found that customers with inactive lenders paid, on average, just 0.4% more than customers in the active market with similar characteristics. There has been comment in Committee on that figure. The FCA’s analysis also found that, of the 250,000 borrowers with inactive lenders, half were in a position to switch to a new mortgage even before any action from the Government. That illustrates one aspect of the diversity of this group.

On the 0.4%, I am aware that there are other estimates out there, including in a recent report, which has been referred to, published by the UK Mortgage Prisoners action group on 8 March, just a few days ago. Treasury officials have reviewed this analysis and noted that these figures seem to be based on surveys with small sample sizes. The comparisons are often inappropriate—for example, contrasting rates that many borrowers with active lenders would not even be offered. I hope that noble Lords will appreciate that this is a complex topic. We are, as I have said, committed to finding practical ways to help.

Amendment 99 seeks to cap standard variable rate mortgages for some customers. Data from the FCA suggest that the majority of borrowers with inactive lenders pay less than 3.5% interest. As I have already said, compared to those with similar lending characteristics, consumers with inactive lenders pay on average only 0.4% more than those with an active lender. This was also backed by the London School of Economics recent report on mortgage prisoners, noting that it does not recommend capping standard variable rates at a low rate. Capping mortgages with inactive lenders could have an impact on their financial stability, as it would restrict lenders’ ability to vary rates in line with market conditions. That would also be unfair to borrowers in the active lending sector, particularly those in arrears, who are paying a higher standard variable rate.

Amendment 116 seeks to provide new fixed interest rate deals for certain mortgage customers with inactive lenders. I have already set out the FCA’s work in introducing a modified affordability assessment and that a number of active lenders—household names—have come forward with offers. The FCA estimates that up to 55,000 borrowers could be eligible to benefit from the new modified affordability assessments. The Government will continue to monitor the situation and hope to see even more options available over the coming months. Enabling people to switch into the active market is the best way to help consumers secure new deals, and that is what we have been doing.

Amendment 117 would require active lenders to seek a borrower’s permission before transferring their regulated mortgage contract to an inactive lender. There are already a number of protections in place for borrowers, meaning that their mortgage cannot be sold on to an unregulated servicer and their terms and conditions cannot change as a result of the sale, so the benefit of explicitly seeking permission from the borrower is unlikely to help them any further.

It is required that all loans within the UK must be administered by a regulated entity, meaning that all customers will be able to benefit from consumer protections —for example, access to the FOS. The terms and conditions of a loan do not change upon sale, meaning that consumers will be treated in line with their original agreement even if their loan was sold to an unregulated entity.

As my noble friend Lady Noakes pointed out, the amendment would also risk disrupting the residential mortgage-backed securities market as it may prevent the effective securitisation of mortgages, where beneficial ownership of a portfolio of mortgages is transferred to a special purpose vehicle. Securitisation is a common way for active lenders to fund themselves, and disrupting the securitisation market would likely have a negative impact on the availability and cost of mortgage credit in the United Kingdom. For those reasons, I ask that the amendment be withdrawn.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I thank those who have contributed to this debate for the various points they have raised. The noble Lord, Lord Griffiths, has it right: this is a complex and detailed issue and it delves down way beyond most people’s experience of how markets of this type operate. In those circumstances, we have a difficult choice as a Committee on how one might want to take this forward.

On the one hand, my noble friend Lord Griffiths is right that the end of the story is what is happening on the ground to people who have ended up in this situation through no fault of their own but as a result of government action. The Government therefore have to explain to the people of this country why, having created this problem, they do not feel that they have more than just a moral responsibility to see it resolved. On the other hand, I take absolutely the Minister’s point that, it being a complex issue and the Government having seen some action already happening, they remain committed to what he called finding a practical plan forward; I hold on to that. However, the complexity and the fact that this affects a relatively small number of people—although 250,000 people is not a small number in my terms—do not mean that we should simply allow the market to find the right balance between the commercial pressures of offering loans and the ability to service those loans and make a profit out of them from those who have limited resource. There is no doubt at all that, having said all that, there is obviously a pandemic issue as well.

Where does that leave us? I take hope from the fact that the Minister said that there is work on the way to try to take this forward. I recognise that it is a complex issue—indeed, I said so in my opening remarks. However, he must accept that the arguments made by myself but made in much more detail and with a much wider range of evidence by the noble Lord, Lord Sharkey, supported by the noble Lord, Lord Holmes of Richmond, suggest that this is more than just a complicated problem which needs to be bottomed out by working with the market. We need convincing that there is work going on that will result in a workable solution of benefit to those affected by this within a reasonable timescale, otherwise we will come back on Report with a better-drafted amendment—perhaps covering some of the points made by the noble Baroness, Lady Noakes, but not all of them—in a way that makes it clear that the Government cannot continue to let this settle itself. It has to be taken forward in policy terms otherwise too much damage will be caused. In the meantime, I beg leave to withdraw the amendment.

Financial Services Bill

Lord True Excerpts

Committee stage
Monday 8th March 2021 Grand Committee

[Baroness Kramer (LD)]

My Lords, I read all the amendments in this group, and I found myself in support of every one of them. It is an excellent group. We all realise now that Amendment 136F, tabled by the noble Baroness, Lady Meacher, is in the wrong group, which I suspect is why she is not speaking on this group under the heading that I loosely call offences.

Picking up on that theme, I say to the noble Lord, Lord Leigh of Hurley, that he was the victim of an attempted fraud. It is astonishing that action did not follow. When we discuss that group of offences, one of my underlying concerns is about the lack of resources to pursue offences of any kind within the financial services spectrum, so I suspect that that is probably where the resistance has been coming from. It is an area that we need to resource properly, and we need to make sure that when a red flag is raised by an experience such as his there is follow-up, knowing that that will have been one of many attempts to defraud and that some of them will have succeeded. I hope that the Government will look at resourcing.

When I look at quite a number of the amendments in this group, whether on buy now, pay later, bills of sale or mortgage prisoners—which I think we will deal with in more detail later—it strikes me that all of them could have been headed off at the pass as problems if we had had an underlying duty of care. That takes me back to the first group of amendments that we dealt with, because with that in place we would not have had a regulator hanging back to see what the competitive implications were, whether or not various tests were reached and so on. It would have shaped very early the framework within which these activities sat. It really is a very strong argument for that duty of care.

On the excellent Amendment 79, I understand, following Chris Woolard’s report, that we are to expect action. The Woolard report raises the issues in detail; I will not repeat them here today but I will say this: if the FCA does nothing more than introduce an affordability test, which is how it tried to manage the payday lenders, we can guarantee that this House will intervene. We will expect stronger action than that, to make sure this problem is grasped—and not allowed to encourage people to fall into debt which frankly they cannot handle—and to put a proper framework around what is essentially a form of lending. I note in that context that Klarna is described today as the most valuable new start-up in Europe; its rate of growth and the appetite for buy now, pay later should set alarm bells ringing.

I thank the noble Baroness, Lady McIntosh, for supporting my Amendment 92. It is a probing amendment that deals with a crucial aspect of financial inclusion—I find echoes of this in some of the words of the noble Lord, Lord Holmes. The inadequacy of basic bank accounts and the reluctance of many of the banks that offer them to engage with the needs of basic bank account customers is an underlying problem. It certainly means that basic bank accounts do not lead to appropriate vehicles for people in the most disadvantaged end to borrow or save, or to engage much more broadly with financial service products. In this day and age, that is a serious issue.

The situation is better today than it was a few years ago; I remember listening to high-street banks who would encourage those coming in to open a basic bank account to go down the street to Nationwide, where they would receive a friendlier reception. Basic bank accounts were regarded just as cost; this was not only inappropriate but meant that those who were welcoming ended up with the greatest share of the burden. I have always taken the view that trying to make an institution provide a service to a customer that they do not want will mean a failed product. We have about 7.5 million people with basic bank accounts and some 1.2 million people completely unbanked. We have to grasp this nettle.

In the United States, intended or not, the approach to people who have been shut out of the financial services system has been different and rather more effective. I would like the Government as well as the regulators to go away and look at it. Under the Community Reinvestment Act 1977, any bank that sought permission to acquire or merge with another bank—something almost every bank was doing at the time—was required to demonstrate that it fully served the disadvantaged communities in its service area. As a civil rights measure, banks were basically red-lining African American, Latin American or Central American communities. They were allowed to serve those communities by supporting local institutions identified as much better fitted to the purpose. This gave a new lease of life to community development financial institutions—CDFIs—of all kinds, including credit unions and community banks. The major banks invested in them to pass that threshold and be able to do acquisitions and mergers, and supported them with expertise in marketing and technology.

I would very much like to see that model here; that is the purpose of my amendment. The DWP’s 2019 report on financial inclusion states:

“Social and community lenders such as credit unions and … CDFIs … provide a lower cost alternative to high-cost lenders, they are small in comparison and lack the visibility and capability to compete at scale. The UK needs a much larger, more vibrant social lending sector”.


CDFIs know the needs of their clients—that is where their work is targeted. They often work with local charities and civil society groups to provide money advice, business advice and a wide range of additional support to make people financially capable.

Some investors in the UK are developing new entities in this space. I am aware of two potential new mutuals, one in the south-west and one in London, targeted at this group of people. The recent report by Ron Kalifa on fintechs identified that new fintechs have the capability to provide a tailored, low-cost offering. But the reality is that very few new players have emerged to serve the excluded sector, which tells me that the system that we have at present is not working. I want all major UK banks to engage with this sector and for the regulator to make it a requirement, not just an act of charity or public relations. That could be done within the banking licence or through regulation, but that would change it from being a passive set of actions to an active way in which to make sure that this gap in the market is filled by people capable of doing it well.

I thank the noble Lord, Lord Naseby, and others who supported Amendment 93, which deals with the current and accelerating crisis of access to cash. The Government promised legislation at last year’s Budget, but there is no sign of it yet. Covid has driven a sharp drop in cash usage from three in 10 people before the crisis to just one in 10 people. That is a huge drop, but it still leaves about 5 million people who rely on using cash. Of course poverty and age are often a characteristic, but for many people it is a strong cultural preference; they want to use cash, and it is really their right.

As I understand it, the Government are going to follow the direction recommended by the noble Lord, Lord Holmes; they will be able to confirm whether that is correct. That would permit retailers to provide cash without a purchase, which would help, but it is still very hit and miss. The Access to Cash Review done by Natalie Ceeney in 2019 highlighted the fact that retailers’ reluctance to accept cash is driving a lot of the change. Bank branches are closing across the country, especially in rural and disadvantaged communities. LINK, the largest cash machine network, has a contract with the Post Office, but it has about 18 months or so to run. Free-to-use ATMs are disappearing fast; when I talked to the industry, the estimate that I was given was that, if we do not do something quickly, half the ATMs in the country will be pay to use within 18 months.

We will need intervention by the FCA. Lots of commercial companies are involved in the system and any change or rationalisation throws up competition issues. The banks, for example, could be given an obligation to provide free access to cash but then allowed to use a utility model whereby they combine to provide free, shared smart machines capable of a range of services, perhaps with an assistant present to help users to navigate the machines. That changes how we think about this issue quite dramatically—and normally we would have time to do that, but we are now faced with an urgent situation.

I quote one final phrase of Natalie Ceeney’s report, because to me it says it all:

“It is … critical that action is taken now, so that no-one is left behind.”


I recommend that the Government take urgent action to deal with access to cash.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, I thank all those who have spoken very genuinely, because we are considering an important group of amendments on consumer access to credit. I am very grateful for the continued and thoughtful interest of noble Lords in this area. I assure all those who have spoken that we are listening carefully and will read this debate.

Amendment 79 would require the Treasury to introduce legislation to bring buy now, pay later products into FCA regulation, to which all speakers referred. The Government are committed to protecting the interests of consumers and, since Second Reading, as the noble Lord, Lord Tunnicliffe, said in moving his amendment so ably, the Woolard Review has recommended that these products should be brought into the scope of FCA regulation. The Government are acting swiftly, following the outcome to this review, just as the Economic Secretary committed to do during this Bill’s passage through the other place. That is why, on 2 February, we announced our intention to legislate to bring them into regulation. However, it is important to know that these products are interest free and, therefore, inherently lower risk than most other forms of borrowing, so it is essential that regulation protects customers in a way that ensures that they can continue to use these products to manage their finances, rather than more expensive forms of credit on which they might otherwise rely. The Government therefore intend to consult stakeholders to ensure that a proportionate approach to regulation is achieved.

--- Later in debate ---

[Lord Tunnicliffe (Lab) [V]]

My Lords, the last Labour Government were supportive of facilitating access to sharia-compliant financial services, and we understand—and welcome—that Her Majesty’s Government have made similarly helpful noises during their time in office. This is an interesting time for financial services as some firms prioritise divesting from fossil fuel projects, and so on. If such moves are possible, surely we can make progress on services that do not have involvement in industries such as gambling or alcohol?

Amendment 88 raises the issue of sharia-compliant student finance, which was subject to a recent e-petition on the Parliament website. In their response, the Government recalled their consultation on the matter back in 2014 and said that they intend to publish an update on progress later this year. While we appreciate that it takes time to engage with communities to understand their needs, evaluate feedback, devise new schemes and ultimately make them operational, there has been a significant wait for new products, and we need evidence from the Minister that we will soon turn a corner.

[Lord True (Con)]

My Lords, as has been eloquently expressed, these amendments relate to sharia-compliant finance and specifically to the availability of sharia-compliant student finance products. This is an area where the Treasury and the Department for Education are in close contact. The Government are committed to ensuring that all students in England with the potential to benefit from further and higher education are able to access it. I know from this debate and from others that many noble Lords of all parties are keen to see action on this.

On the specific amendments, which the noble Lord, Lord Sharkey, stated are probing, Amendment 80 seeks to require the Treasury to publish an assessment of the availability of sharia-compliant financial services, I can assure noble Lords that the Government are committed to ensuring that no UK customer is denied access to competitive financial products because of their faith. As referred to in the debate, the United Kingdom is indeed the leading western hub for Islamic finance, a position we have maintained for several years now. Treasury Ministers and officials conduct regular engagement with key stakeholders in the Islamic finance sector to inform our policies.

Amendment 88 seeks to add access to sharia-compliant student finance to the FCA’s objectives within Section 1B of the Financial Services and Markets Act 2000. It would be ineffective to add this objective because student loans are exempt from FCA regulation, meaning that the FCA would not have the powers to fulfil this duty. Additionally, student finance provision is a devolved matter while the FCA is our UK-wide regulator. Finally, as I have explained, work is under way in government to ensure that all eligible students are able to access student finance.

A number of noble Lords commented on the pace of this work. As the noble Lord, Lord Sharkey, said, the Government published a consultation in September 2014 into a potential model that could form the basis of a new student finance product. The Government signalled in the consultation response that they would need to take new primary powers to enable the Secretary of State for Education to make alternative payments in addition to grants and loans. These were secured in the Higher Education and Research Act 2017. The Government have also carried out work with the Islamic Finance Council UK on an alternative student finance product for tuition fee and living cost support compatible with Islamic finance principles.

As has been stated, the implementation of alternative student finance is currently being considered alongside the review of post-18 education and funding. The interim report of that review was published on 21 January and the review is due to conclude alongside the next multi-year spending review. The Government will therefore provide an update on alternative student finance in due course. We should not underestimate the scale of complexity here. The Department for Education is trying to replicate a system of student finance that delivers the same results as now where students do not receive any advantage nor suffer any disadvantage through applying for alternative student finance.

I am sure that our colleagues in the departments concerned have heard the concerns expressed by noble Lords. I hope that, for these reasons, the noble Lord, Lord Sharkey, will feel able to withdraw his amendment.

[Lord Sharkey (LD) [V]]

I thank everybody who has spoken in the debate on this group. I confess that I should have said clearly at the beginning that my amendments and their text were not the issue; the amendments were simply the fossilised remains of my scope negotiations with the Public Bill Office and a means of introducing the subject of sharia-complaint student finance.

I must say that I am, as usual, extremely disappointed by the Minister’s evasive and unconvincing response. It is a great pity. I still do not understand why there has been such a long delay in addressing this serious problem. The Minister has not offered a reason for the delay except to point at various complications. Perhaps I should remind him that the takaful version of the Help to Buy mortgage system was introduced from a standing start in six months. This has taken nearly seven years, and we have not got there yet. I simply do not understand why this is going to be prolonged and why the Minister cannot give us any assurance about a firm date for the introduction of a sharia-compliant student product.

I also do not understand—I never did—why the Augar review is at all relevant; perhaps the Minister can explain why at some other point. However, I understand that the Muslim community continues to suffer a direct disadvantage without any good reason or plausible excuse. The Government are acting in a completely mean-spirited and heartless way. They are failing in their moral duty, failing to fulfil their explicit promises and failing to provide any real comfort that they might eventually do what they should have done long ago. They are behaving neglectfully and really rather disgracefully. We will return to this issue later.

Financial Services Bill

Lord True Excerpts

Committee stage
Monday 1st March 2021 Grand Committee

Perhaps they could also take us through how we can rest assured that companies that by the nature of their operations one would expect to be liable to pay taxes in the UK are not able to choose the ongoing relationship with Gibraltarian financial firms in order to avoid those UK liabilities. I think that around the world we are asking for much greater honesty on tax, and we find it very important to be a leader in cleaning up historical money-laundering regimes. However, Gibraltar is so closely associated with us that, unless it is evidence of that, it is very hard for us to make that national and international claim.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, this has been a very interesting brief debate. I will not follow the noble Lord, Lord Rooker, into speculating about Delaware because I am acutely conscious that the new President of the United States represented Delaware in the US Senate for 36 years. However, I appreciate what my noble friend Lady Neville-Rolfe and indeed the noble Baroness, Lady Kramer, said: I think that the people of Gibraltar merit sympathy and understanding.

Before I turn to the specific amendments tabled, it might be beneficial in the light of a number of the questions and comments to set out some of the intentions behind the introduction of the Gibraltar authorisation regime. As the right reverend Prelate said, the financial services industry plays an important role in Gibraltar’s economy, and Gibraltar-based firms have made extensive use of the existing market access arrangements between the UK and Gibraltar. It is true, as has been pointed out in this debate, that currently firms based in Gibraltar service a large retail consumer base in the United Kingdom, particularly in the insurance sector, where, as has been said, more than 20% of motor policies in the UK are written by Gibraltar-based insurers. The reasons for the concentration of motor insurance in Gibraltar are complex and obviously of a commercial nature, but it is natural that growth in a sector can lead to an agglomeration effect. Business attracts business, and that attracts people and talent.

I note the remarks that have been made in the debate on a range of companies. However, I remind noble Lords that the Bill is limited to financial services firms only. It will establish a new legal and institutional framework that provides for mutual market access and aligned standards in financial services between both jurisdictions. The United Kingdom and Gibraltar have a historic and unique relationship in financial services, and the UK has not had the same level of market access arrangements with any other jurisdiction. This regime will enable Gibraltar-based firms operating in the UK to continue to do so provided they meet certain standards. That way, the regime respects Gibraltar’s regulatory autonomy while ensuring high standards of supervision and consumer protection for UK customers.

On the amendments themselves, Amendment 46 would require any Gibraltar-based person carrying on authorised financial services activity in the UK to provide an annual statement to the Treasury of the profits it has made from those activities, and for the Treasury to report on this. This proposal cannot be supported by the Government because it does not reflect Gibraltar’s autonomy. As an overseas territory, Gibraltar is fiscally autonomous, and it has the right to set its own policy to support its economy within international standards and to determine its own tax rates. The scope of the GAR is focused on ensuring continued market access for Gibraltarian firms to the UK market based on the alignment of relevant law and practice. The GAR does not extend to taxation.

As my noble friend Lady Neville-Rolfe said, Gibraltar is already committed to meeting international standards on illicit finance, tax transparency and anti-money laundering, including those set by the OECD and the Financial Action Task Force. Gibraltar shares confidential information on company beneficial ownership and tax information with UK law enforcement bodies in real time and has agreed to introduce publicly accessible registers of company beneficial ownership. The Government were satisfied that the Gibraltar authorisation regime is rigorous and includes the right safeguards to ensure consistent standards of law and supervisory practice. I therefore ask that the amendment is withdrawn.

Amendment 47, in the names of the noble Lords, Lord Tunnicliffe and Lord Eatwell, would require the Treasury to report on the regime, the current position regarding financial services market access enjoyed by the Crown dependencies and the case for extending the regime to the Crown dependencies. I suggest to noble Lords that the first part of this amendment would replicate provisions that already exist in the Bill. Clause 22(3) of the Bill, which inserts a new Section 32A into the Financial Services and Markets Act 2000, already imposes a duty on HM Treasury to lay a report to Parliament on the operation of the regime. This report will be presented to both Houses within two years of the regime coming into force, and every two years from then on. It will specifically include an assessment of whether the alignment condition between the UK and Gibraltar is satisfied before market access is granted for an approved activity.

Noble Lords have alluded to the frequency of reporting. It has been chosen considering a range of relevant factors, including the length of time required to undertake a meaningful assessment. In this context, the amendment would simply duplicate this requirement within 12 months of the Bill receiving Royal Assent, potentially demanding a statement before this is appropriate and before any assessment has been completed.

Turning to the second point raised in this amendment, it is important to note—and the noble Lord, Lord Eatwell, acknowledged this—that no other overseas territory or Crown dependency has the same market access arrangements with the UK as Gibraltar has today. The Gibraltar authorisation regime has been designed to deliver the Government’s commitment to Gibraltar in 2018 to maintain long-term market access for financial services between our jurisdictions, based on shared high standards of regulation and modern arrangements for information-sharing, transparency and co-operation. This commitment and the framework reflect the unique historic position of Gibraltar and the UK, specifically the passporting arrangements that were in place when we were both members of the EU single market, as has been said.

In our judgment, it would not be appropriate to extend the operation of the regime to other jurisdictions that do not have the same starting point of close alignment between our rules and supervisory practice. The Treasury remains committed to working with the Crown dependencies, and there are existing tools, including equivalence, that enable different degrees of access to the UK market and are more appropriate for the circumstances of the Crown dependencies. Having considered those points, I therefore ask noble Lords not to press this amendment.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

I have not received a request from anyone wishing to speak after the Minister, so I call the right reverend Prelate the Bishop of St Albans.