Breathing Space Scheme

Debate between Nick Smith and John Glen

Wednesday 19th June 2019 Commons Chamber

[Nick Smith (Blaenau Gwent) (Lab)]

I welcome the breathing space scheme, which will certainly be helpful in Blaenau Gwent, because we discovered that Wonga lent £1 million a year to our borough’s residents. I suspect that a 60-day period will not be enough. The fact is that although citizens advice bureaux are great, we have insufficient guidance and support in our borough. I think that 90 days might be necessary, or perhaps even more, so I ask the Minister to think carefully about that possibility.

[John Glen]

We certainly keep all matters under review, but the 60-day period has not come from nowhere; it has come from deep engagement with the sector. As Joanna Elson, the chief executive of the Money Advice Trust, has said,

“this new scheme could well be a game-changer in our efforts to tackle problem debt as a society.”

I recognise that there are a range of views, but we have looked at what is out there and considered the Scottish experience, and we believe that this is the right policy response.

British Steel Pension Scheme: Transfers

Debate between Nick Smith and John Glen

Wednesday 10th April 2019 Westminster Hall

[John Glen]

I have listened carefully to the hon. Gentleman’s interventions, and he is right to say that 6.6% of the 122,000 individuals who had those pensions did transfer out, and that, in general, the default option would not be to transfer out of a DB scheme. There is work going on to develop pathways. I am not clear, given that it is not my direct area of responsibility, about the status of that work. I think, however, that there is a challenge, in the context of the policy on freedoms that is now well under way, about how to reconcile that freedom with making the decisions in question. Perhaps I might pivot over to consider the DC schemes. I think what is happening is that many people decide to take the 25% tax-free lump sum and then do not necessarily make appropriate, or the best, decisions on the remainder of that pot of money. Work is being done on that, but with respect to the specificity of the default option, I cannot give the hon. Gentleman a definitive response now.

I think we are moving to a point where there will be default pathways that people will need to be advised on when they take advice. I think that is probably a sensible compromise that deals with the fact that, in some instances, not coming out of the DB scheme would not be the right thing to do. The hon. Gentleman will agree about that, although he is also perfectly correct to say that, generally, not coming out would be the right thing to do. There is work to be done, but I think progress is being made, and I acknowledge the sensible point he has raised.

[Nick Smith]

I want to focus on what the Minister calls the 6%—perhaps nearly 8,000 people—who may have been badly advised in this case. What is he going to do to get the FCA to up its game, contact those people and help them, in case they have been badly advised?

[John Glen]

Following our meeting, I undertook to speak to Andrew Bailey, the chief executive. We are due to meet every few months, and our next meeting is imminent. I will speak to him about that. A number of live investigations are under way; I do not have investigative power myself, but I will take a close interest in those investigations. Individual companies—I will not name them—are being actively investigated now, and I expect the FCA to make announcements and recommendations consequent to those investigations imminently. I am not privy to the detail, but I am taking a close interest and will be speaking to the chief executive, because I realise that time is pressing on. This morning we have heard vivid accounts of individuals and families ruined by these decisions, and I take the matter seriously.

To get back to my script, the FCA leads on financial advice and has considerable power to act against firms and individuals who provide negligent advice. To be clear: the FCA can impose a financial penalty on a firm, require the firm to pay redress to its customers, restrict the firm’s permissions, or prohibit individuals from operating in financial services. The FCA can bring criminal prosecutions. I hear the enthusiasm for that action being taken, and I think the FCA hears it too, but it works closely with other organisations to support criminal prosecutions. Both the Government and the FCA are targeting their attention on the effective regulation of financial services and wider work to tackle scams, including the recent implementation of a ban on pensions cold calling.