Financial Services Regulators

Andrea Leadsom Excerpts

Monday 19th January 2015 Written Statements

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The recommendations from the review into the enforcement decision-making arrangements at the financial regulators were announced on 18 December 2014. I am today depositing a copy of the review report in the Library of the House.



The review report is also available online at: http://www.parliament.uk/writtenstatements.

[HCWS207]

Diverted Profits Tax

Andrea Leadsom Excerpts

Wednesday 7th January 2015 Westminster Hall

[The Economic Secretary to the Treasury (Andrea Leadsom)]

It is a pleasure to serve under your chairmanship, Mr Turner, and I wish you a happy new year. I congratulate my hon. Friend the Member for Amber Valley (Nigel Mills) on securing this debate on such an important subject. As a number of colleagues have pointed out, the new measure is designed to ensure that Britain is a very competitive place—in fact, our ambition is to be the best place in the world to start up and run a business. If a company comes to this country, we will charge it low tax rates, but it will be expected to pay. That is what lies behind the measure: to ensure that companies pay that fair rate of tax.

The Government are working to create the most competitive tax system in the G20—a simple, competitive and fair tax system that will support economic growth and investment. However, we then expect companies operating in the UK to pay these fair and competitive taxes, so we are taking action both domestically and internationally. It is not one or the other—one does not rule out the other, as the hon. Member for Birmingham, Ladywood (Shabana Mahmood) suggested it may. We are trying to address concerns about some businesses paying little or no tax on profits made in the UK.

When this Government came to power, Britain had one of the least competitive business tax regimes in Europe. Since 2010, the Government have introduced a series of tax reforms to boost competiveness, such as the patent box, increasing the generosity of research and development reliefs, modernising the UK’s controlled foreign companies regime, and cutting corporation tax from 28% to 21%—next year, it will fall to 20%, the lowest rate in the G20.

The corporation tax reforms were a central plank of our economic strategy, and that strategy is working: growth, jobs and investment are all moving in the right direction. An increasing number of multinational businesses are locating activities in the UK, including companies such as Brit Insurance and Hitachi Rail Europe. The UK is one of the most competitive and attractive countries when it comes to deciding where to base a business.

It is clear that the tax reforms we have made since 2010 are supporting the economic recovery, and that our plan to cut corporation tax again to 20% will lead to more jobs and investment in the UK. Nine out of 10 UK businesses say the corporation tax rate cuts delivered since 2010 have been good for UK competitiveness.

However, as all colleagues have pointed out, there are real public concerns about unfairness in the system, whereby some companies, particularly large multinationals, are seen to be aggressively avoiding tax in the UK. It is vital that the public have confidence in the tax system, and that the tax rules treat both companies and individuals fairly and consistently, without leaving them scope to avoid their obligations. As we seek to return the public finances to balance and reduce the deficit, it is also important to make sure that we collect all the tax that is due. For those reasons, we are taking action, both domestically and internationally, to reform the tax rules and tackle corporation tax avoidance.

The hon. Member for Birmingham, Ladywood asked whether we are therefore giving up on the international tax framework, and of course, as she will know, that is not the case. The current international tax rules were first developed in the 1920s and desperately need reforming, so that they continue to support free trade and ensure a level playing field for businesses, but also to make sure that they address weaknesses such as companies playing different regimes off against each other to avoid paying tax on their profits anywhere at all.

The UK has taken a lead on the international stage to reform these rules and is committed to multilateral action through the G20 and the OECD to tackle the issue of base erosion and profit shifting—known as BEPS. At their summit in St Petersburg last year, the G20 leaders fully endorsed the ambitious and comprehensive BEPS action plan set out over 2014 and 2015. The individual action points are being taken forward by various OECD working parties.

The OECD BEPS project is reviewing the international tax rules to find out where they are not fit for purpose in today’s modern globalised economy. Over 40 countries are collaborating to take forward the action plan: a comprehensive two-year strategy to tackle international tax avoidance.

[Ian Swales]

We constantly hear about the G20 and the OECD, but the Netherlands, for example, is not even a member of the G20. Is the Minister concerned that all this work is going to be focused on certain countries, but that will, in itself, just lead to even more activity in countries that are not party to this process?

--- Later in debate ---

[Andrea Leadsom]

The hon. Gentleman makes a good point; nevertheless, the UK is at the forefront of driving the international effort to tackle these problems—these weaknesses—in international tax laws that are very out of date. The UK is certainly doing its bit.

In line with the BEPS action plan, in September 2014 the OECD’s first set of outputs from the BEPS project were fully endorsed by the G20 Finance Ministers at their Cairns summit. In a global economy in which goods and services flow freely between countries, international co-operation, as the hon. Gentleman points out, is the only way to tackle the challenge of tax avoidance. Measures taken in Britain will not deal with the problem on their own; we must have global tax rules, too. That is why, under our Prime Minister, we have been pushing, through the G8, the G20 and the OECD, for global solutions.

[David Mowat]

Of course, that has to be the right answer, but does the Minister really believe that countries such as Luxembourg and the Republic of Ireland, which derive a considerable amount of GDP from a tax evasion strategy, will contribute to any such global effort when it is so important to their standard of living?

[Andrea Leadsom]

I am grateful to all hon. Members for the points they are making about other tax jurisdictions. What the UK can do is lead the international effort and focus on what we can do to ensure that the UK’s tax base is not eroded. Therefore, although these other points are extremely important, hon. Members will realise that I cannot influence directly the tax laws that Luxembourg undertakes for itself, other than through the contribution the Government make to the international effort to put pressure on different jurisdictions.

The Chancellor announced, in the autumn statement 2014, UK action on two of the internationally agreed 2014 outputs of the BEPS project. I know that the hon. Member for Redcar supports the UK’s introducing legislation to implement the G20-OECD agreed model for country-by-country reporting, which will require multinational companies to provide tax authorities with high-level information on profit, corporation tax paid and certain indicators of economic activity for risk assessment. Draft legislation for the Finance Bill 2015 was published on 10 December 2014, with a tax information and impact note and an explanatory note.

Furthermore, a consultation document on the UK plans for implementing the G20-OECD agreed rules for neutralising hybrid mismatch arrangements—another point raised by the hon. Gentleman—was published at the autumn statement. The new rules will tackle a tax avoidance technique used by multinationals to exploit differences between countries’ tax rules to avoid paying tax in either country, or to obtain more tax relief against profits than they are entitled to.

However, the Government have gone further still. The hon. Member for Birmingham, Ladywood asked whether that was instead of BEPS or because we feel that BEPS will not work, but no, not at all—this is in addition. The Government have gone further to tackle tax avoidance by multinational companies operating here in the UK and to strengthen our defences against the erosion of the UK tax base. That is entirely complementary to the BEPS process. Where companies in the UK are going to extraordinary lengths to avoid paying their fair share of tax, we will act to prevent that. That is why the Government have introduced the new diverted profits tax—to counter the use of aggressive tax planning by large multinationals to avoid paying tax in the UK on profits that have been generated from economic activity here in the UK.

The diverted profits tax will be applied using a rate of 25% from 1 April 2015. The measure is targeted at contrived arrangements used to shift profits away from the UK in a manner that ensures they go untaxed or largely untaxed. The measure is designed to counter the erosion of the UK tax base as a result of complex structures that circumvent the international tax rules on permanent establishment and transfer pricing.

For example, some multinationals have gone for aggressive tax planning that involves quite complicated arrangements, such as the so-called “double Irish”—a point raised by the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Amber Valley—using group companies in other countries as conduits to route expenditure to tax havens so that profits from UK activity goes untaxed.

Specifically, the diverted profits tax applies in two situations. The first is where a foreign company carries out activities in the UK in connection with the supply of goods or services to UK customers in such a way that it avoids creating a permanent establishment, and the main purpose of that arrangement is to avoid UK tax, or a tax mismatch is secured such that the total tax derived from UK activities is significantly reduced. The second situation is where a UK company, or a foreign company with a UK permanent establishment, creates a tax mismatch by using transactions or entities that lack economic substance.

If a multinational company is found to be using those contrived arrangements to avoid tax in the UK, HMRC will issue a notice that requires the diverted profits tax to be paid up front. The legislation provides for a review period of up to 12 months, within which the multinational company will have the opportunity, among other things, to demonstrate that it was not liable for the charge or to provide information to HMRC to show that the level of disallowance of intra-group expenditure in computing the charge is wrong on normal transfer pricing principles. The measure is designed to complement our transfer pricing arrangements.

[Ian Swales]

On the second case the Minister mentions, she can be interpreted as talking about artificial financing structures—for example, moving money to Luxembourg and then loaning it back to the UK—but the briefing note says that the legislation specifically excludes such arrangements. Can she confirm that?

[Andrea Leadsom]

I think I have been quite clear about the purpose of the legislation. I am not aware of the briefing note to which the hon. Gentleman refers. I will address the point again in responses to questions, so perhaps we can deal with it then.

After the 12-month review period, if the charge has not been withdrawn, the multinational company will have the right to appeal the charge at a tax tribunal on any appropriate grounds.

There are some specific exemptions from the tax. A number of hon. Members asked who was exempted. Those will include small and medium-sized enterprises, companies with limited UK sales and the situation where arrangements give rise only to loan relationships. I will come on to that in more detail at the end of my responses to questions. The draft legislation was published on 10 December and will come into effect from 1 April. Comments from industry are of course welcome as we finalise the rules to ensure that they are clear and targeted.

As I said, the UK is fully engaged in the work to reform the international tax framework through the OECD-G20 BEPS project. The introduction of the diverted profits tax is entirely consistent with those principles and complements the ongoing international efforts in the BEPS project, which is looking to align taxing rights with economic activity.

A number of hon. Members questioned the yield that is expected or forecast from the diverted profits tax. The Office for Budget Responsibility has certified the central estimate of tax yield to be £1.35 billion over the next five years to 2019-20. That will contribute to the £31 billion that HMRC has already secured from tackling tax avoidance and evasion by large businesses since April 2010.

Let me answer some specific questions. My hon. Friend the Member for Amber Valley asked whether this measure was in some way overriding UK tax treaties. I can reassure him that that is not the case. The scope of the UK’s tax treaties is limited under UK law to income tax, capital gains tax and corporation tax. The diverted profits tax is therefore not covered by those treaties, so, as a formal matter, there is no treaty override; and in fact the OECD, in the commentary on its model tax treaty, provides that states can deny the benefits of a tax treaty where arrangements have a main purpose of securing more favourable tax treatment in circumstances contrary to the object and purpose of that treaty.

My hon. Friend also asked whether the measure was compatible with EU law—he did so rather reluctantly, and I would be reluctant, too, on the matter of tax sovereignty. The diverted profits tax has been designed to comply fully with our obligations under EU law. It is aimed at structures that are clearly designed to erode the UK tax base. As such, it is an appropriate response to those who abuse EU law to divert profits from the UK. The safeguards built into the legislation provide taxpayers with a number of opportunities to demonstrate that they should not be subject to the diverted profits tax. Accordingly, we believe that this is a balanced and proportionate measure that tackles arrangements that are clearly designed for tax avoidance.

The hon. Members for Strangford, for South Antrim (Dr McCrea) and for Upper Bann (David Simpson) asked about the specific cut-off for the diverted profits tax. I can tell them that the rules do not apply to SMEs as defined by the EU. That includes companies with fewer than 250 employees, turnover of less than or equal to €50 million and a balance sheet size of €43 million. That is consistent with our transfer pricing legislation. There are also measures that restrict the diverted profits tax if there is not much UK business going on.

My hon. Friends the Members for Amber Valley and for Warrington South (David Mowat) asked about the Channel Islands and the Isle of Man. Of course, they will be aware that those territories are free to set their own rates. We in the UK will go through international forums in terms of influencing international tax jurisdictions, but the UK has a very clear and transparent tax policy-making process, as evidenced by this parliamentary debate. Tax is a national, sovereign matter, so individual tax jurisdictions are free to set their own tax policy. The diverted profits tax is designed to ensure that the UK’s tax base is not eroded by that.

My hon. Friend the Member for Amber Valley asked whether the assessment and collection processes will really work and whether they are fair. For example, if HMRC gets a notice from a big company saying that it might be within the scope, how can it issue an initial charge notice in 30 days? Where would the information come from and so on? I can tell him that the notification of potential liability to diverted profits tax must be made within three months of the end of the company’s accounting period. The Government are still consulting on the detail of the notification requirement and would welcome comments on the drafting. However, it is likely that not all notifications will result in the issue of a preliminary notice. The preliminary notice does not create a charge, but merely warns that a charging notice may be issued and sets out estimated figures that would be included. Following the issue of the preliminary notice, the company would have 30 days to correct any factual inaccuracies in it. That would include any errors in figures on which an assumption in the notice is based.

My hon. Friend the Member for Amber Valley and the hon. Member for Strangford asked whether the provisions were drawn too broadly, such that they might catch not only the abusive structures targeted but a whole load of other, unintended taxpayers. The Government are of course open to suggestions on how the drafting of the legislation could be clarified without undermining its effectiveness. However, the calculation of the charge follows well established transfer pricing principles. Those principles are widely understood and routinely applied by businesses in pricing intra-group transactions. The only difference is that where the contrived features set out in the legislation are present, the diverted profits tax will have to be paid earlier than in a normal transfer pricing dispute.

[Ian Swales]

I thank the Minister for giving way again; she is being very generous. She talked about the notification process and so on. Is she happy with our knowledge of legal entities and the fact that many of them will be outside the UK? Will HMRC be able to cope with that process?

[Andrea Leadsom]

The hon. Gentleman will be aware that this Government have significantly increased the resources available to HMRC for this purpose, so yes, we are confident we will be able to manage this process.

There were a number of other questions, which I fear I will not have time to deal with now, about interest payments being excluded. There is a limited exemption for certain arrangements that involve only loans, and separate work is going on to look at how to ensure fairness in the measures. That matter is not being excluded, but is being looked at separately.

Hon. Members raised the question of the wholesale diversion of profits to Luxembourg. The legislation targets profit diversion only where the profit has a clear link to the UK, as I think I made clear. It would not be appropriate for the legislation to go further than that and to bring into scope profits that originate from other territories. However, the Government are strongly supportive, as I said, of the BEPS process, which aims to prevent and address this international problem.

In conclusion, I reiterate that the whole purpose of the diverted profits tax is to create in the UK the most competitive environment in which to base and run a business, including low corporation taxes, but it is a requirement of this Government that companies wishing to do business in the UK should pay those taxes and should not seek to avoid paying them.

Lloyds Banking Group (Government Shares)

Andrea Leadsom Excerpts

Thursday 18th December 2014 Written Statements

[The Economic Secretary to the Treasury (Andrea Leadsom)]

Yesterday the Chancellor of the Exchequer announced that he has outlined a trading plan to sell more of the Government’s shares in Lloyds Banking Group.

This decision was made on the basis of advice from UK Financial Investments Ltd that it would be appropriate to outline a plan to gradually sell shares in the market over a period of time, in an orderly and measured way and in accordance with pre-agreed parameters. The trading plan will last for approximately six months.

The Government are committed to returning Lloyds to the private sector and getting taxpayers’ money back. A statement will be laid before Parliament with further details at the end of the plan.

Future sales will always be subject to value-for-money considerations and market conditions.

International Money Transfer Charges

Andrea Leadsom Excerpts

Wednesday 17th December 2014 Westminster Hall

[The Economic Secretary to the Treasury (Andrea Leadsom)]

It is a pleasure to serve under your chairmanship today, Ms Dorries. I thank the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) for raising such an important topic. I say to her, first, that it has taken up a lot of my time since I have been in this role. It is a very complicated issue and it is very important to me that we get it right.

I also congratulate the right hon. Lady on raising the issue with the Prime Minister at Prime Minister’s questions earlier today. As he set out, the Government are acutely aware of the importance of remittances from UK residents that are sent to their family and friends in developing countries. Annual remittances from the UK amount to more than £15 billion. In the specific case of Somalia, remittances support nearly 3.5 million people and account for approximately half of Somalia’s gross national income. Since I came to this job earlier in the year, I have therefore personally been making sure that the Government are doing everything we can to ensure that remittances continue to flow through accessible and secure channels from the UK to all regions of the world.

The House will be aware that transparency of fees and charges for financial services products and competition between providers are key priorities for the Government. Increased transparency promotes greater competition, it provides better outcomes for customers, and it helps strengthen people’s trust in financial institutions—it is fair to say that that has been somewhat shaken in previous years. Therefore, it is my firm belief that greater competition as a whole in the financial services industry will lead to greater innovation, and ultimately to better outcomes for customers.

We have put in place a huge range of programmes of reforms to support greater competition in banking. That includes putting competition at the heart of the regulatory system, with statutory competition objectives for both the Financial Conduct Authority and the Prudential Regulation Authority. Very importantly, we have created the new Payment Systems Regulator, which will come into its full powers on 1 April 2015.

The PSR has three statutory objectives: first, to promote effective competition in the markets for payment systems and for services provided by those systems; secondly, to promote the development of innovation in payment systems, in particular the infrastructure used to operate payment systems, in the interest of customers; and thirdly, to ensure that payment systems are operated and developed in a way that considers and promotes the interests of customers.

Coming back to the specific issue that the right hon. Lady raised on the cost of remittances, I am aware that my ministerial colleagues at the Department for International Development have been considering the cost of money remittances, and they have already taken action to reduce fees. That includes action to improve the transparency of fees by supporting the pioneering price comparison website sendmoneyhome.org to increase transparency around remittance transfer costs and to stimulate competition. The average cost of sending £100 has fallen by 5.6% across 11 countries and by 28% to India. The web platform has now become fully commercialised and has been replicated in France, Germany, Italy, the Netherlands, Australia and New Zealand.

DFID has been taking action to improve inter-market co-operation. Between 2009 and 2015, DFID will support the FinMark Trust in its drive to reduce the average cost of remittance transfers from South Africa to other Southern Africa Development Community countries by 30% by 2014.

Given the concerns rightly raised by the right hon. Lady today, I plan to write to my ministerial colleagues at DFID to ask that we work together to think about what more can be done and particularly to seek an update on the points she made about the Brisbane G20 discussions. However, as I have said, this is an extremely complicated issue. She is fully aware that in recent years we have seen growing concern among banks globally about money laundering and terrorism financing, and, of course, the very real possibility of potentially crippling enforcement action against banks that fail properly to protect against these risks. The money service business sector has been particularly affected, as she knows.

The right hon. Lady mentioned the actions taken by the hon. Member for Bethnal Green and Bow (Rushanara Ali), and my hon. Friend the Member for Ealing Central and Acton (Angie Bray) and many other colleagues have also brought this issue to the attention of the House on a number of occasions.

I know that the right hon. Lady is also aware of the action group on cross-border remittances, which was set up at the start of 2014 to seek to address this worrying trend towards debanking the money service business sector. The action group is composed of Government representatives, banks, money transfer operators and industry associations. It has initiated a number of important activities to revise guidance on compliance with the money laundering regulations; to improve the understanding of money laundering and terrorism financing risks; importantly, to sustain the flow of remittances from the UK through formal channels; and particularly, to improve trust in the remittance sector.

Our banks and regulators have a very real responsibility to ensure that they are not supporting activities that could pose a threat to British citizens and undermine the progress that developing countries are making. The right approach to tackling these threats should effectively deter, detect and deal with those who seek to use the financial system, including money remitters and banks, to launder money or fund terrorism. At the same time, it should protect and support legitimate businesses and, in particular, critical lifelines for countries such as Somalia.

In conclusion, as the Prime Minister set out earlier today, this is a very complicated area, but I would like to reassure the right hon. Lady that the Government are committed to doing what we can to keep remittances flowing and the costs down.

Banking Act 2009

Andrea Leadsom Excerpts

Tuesday 16th December 2014 Written Statements

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The Treasury has laid before the House of Commons a report required under section 231 of the Banking Act 2009 covering the period from 1 April 2014 to 30 September 2014.

Copies of the document are available in the Vote Office and the Printed Paper Office.

Counter-terrorist Asset Freezing Regime

Andrea Leadsom Excerpts

Tuesday 16th December 2014 Written Statements

[The Economic Secretary to the Treasury (Andrea Leadsom)]

My noble friend the Commercial Secretary to the Treasury (Lord Deighton) has today made the following written ministerial statement.

Under the Terrorist Asset-Freezing etc. Act 2010 (“TAFA 2010”), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset-freezing regime mandated by UN Security Council Resolution 1373.

This is the 14th report under the Act and it covers the period from 1 July 2014 to 30 September 2014. This report also covers the UK implementation of the UN al-Qaeda asset-freezing regime and the operation of the EU asset-freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the UN al-Qaeda asset-freezing regime, the UN has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under the Al-Qaeda (Asset-Freezing) Regulations 2011. Under EU regulation 2580/2001, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.

Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council Resolution 1373. The two individuals subject to restricted designations under section 3 of the Act are denoted by A and B.

The following table sets out the key asset-freezing activity in the UK during the quarter ending 30 September 2014:

Asset Resolution (Consumer Credit Act)

Andrea Leadsom Excerpts

Thursday 11th December 2014 Written Statements

[The Economic Secretary to the Treasury (Andrea Leadsom)]

In February 2008, under the previous Government, Northern Rock was nationalised due to the financial crisis. In January 2010 the previous Government restructured the activities of Northern Rock between Northern Rock plc, a newly created company which was subsequently sold to Virgin Money in 2011, and the existing company, which was renamed Northern Rock (Asset Management) (NRAM). The balance sheet of NRAM is managed by UK Asset Resolution (UKAR).

In 2012, UKAR identified certain Consumer Credit Act (CCA) regulated loans in the NRAM portfolio where the annual statements and other notices were not compliant with CCA requirements. The CCA regulations only applied to loans of £25,000 or less. The period of non-compliance originates from changes to the CCA implemented in 2008, before the separation of NRAM and Northern Rock plc in January 2010. The Economic Secretary to the Treasury at the time this non-compliance was identified (Sajid Javid) informed Parliament, and UKAR has remediated the interest paid and other charges fully to affected customers for the period of non-compliance. This is another example of the significant cost to taxpayers of the failure of the previous regulatory regime.

After these mistakes were discovered, UKAR’s board commissioned Deloitte to conduct an independent enquiry into the specific circumstances of the issue, and any implications for UKAR’s broader internal procedures and controls. The report can be found here:

http://www.ukar.co.uk/media-centre/press-releases/2013/15-07-2013?page=6

In 2012, UKAR also discovered that incorrect documentation had been sent to certain customers with loans of more than £25,000. These errors also originate from when changes were implemented to the CCA in 2008, before the separation of NRAM and Northern Rock plc in January 2010. While these loans fell outside of the scope of the CCA, UKAR commenced declaratory proceedings in the High Court to determine whether customers who took out such loans are entitled to the same or similar rights and remedies as those customers who took out loans of £25,000 or less that were regulated under the CCA. This action was taken in order to provide clarity to UKAR and to its customers, and details of the proceedings, including an estimate of the cost of remediation, were published in the Treasury’s annual report and accounts for 2013-2014.

The High Court has declared that the defendants to the proceedings are contractually entitled to the rights and remedies applicable to a regulated agreements under the CCA (2008).

Accordingly, NRAM was in breach of its obligations by issuing documentation that did not comply with the CCA (2008), and by not re-crediting the interest payments and default sums paid during the period of non-compliance. UKAR, and UK Financial Investments, on behalf of the Treasury, will now carefully consider legal advice to establish whether an appeal should be pursued. UKAR have estimated the cost of remediating affected customers to be £261 million plus any future interest accruing on these accounts before remediation is made. The cost of any future interest amounts to approximately £3 million per month.

UKAR has performed well, repaying more than £12 billion of Government loans and actively managing the assets with the goal of ensuring value for money for the taxpayer. The OBR has forecast that UKAR will have a positive impact reducing both public sector net borrowing and public sector net debt in the current fiscal year. This would be true even if remediation costs were paid this fiscal year.

UKAR will confirm whether an appeal will be pursued in due course. There is no need for customers to take any action at this time. Further details for customers can be found on the NRAM website: www.nram.co.uk

Oral Answers to Questions

Andrea Leadsom Excerpts

Tuesday 9th December 2014 Commons Chamber

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

10. What recent assessment he has made of the effect of the housing market on the economy.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The Government are committed to making the aspiration of home ownership a reality for as many households as possible. The Government’s Help to Buy scheme and last week’s stamp duty reforms will continue to support housing market activity and new housing supply is already responding with housing starts growing by 16% in the year to 2014 in quarter three.

[Mark Lazarowicz]

The recent measures are no doubt welcome, but would the Minister care to confirm that annual house completions have been lower in every year under her Government than in every year of the last Labour Government?

[Andrea Leadsom]

The point is that we believe in the aspiration to buy your own home. We have seen house prices recover but they are still in real terms lower than they were at the peak under the last Government. This Government have delivered housing starts at their highest since 2007 and our Help to Buy scheme, which has helped 77,000 people to get on to the property ladder, is a very important measure.

[David Rutley (Macclesfield) (Con)]

I am pleased that the Government’s stamp duty reforms are already helping more first-time buyers in Macclesfield. What assessment has my hon. Friend made of the effect the stamp duty reform plus the Help to Buy scheme will have on helping more people to get established on the housing ladder?

[Andrea Leadsom]

My hon. Friend is quite right. Our stamp duty changes have meant that 98% of the people who pay stamp duty will receive a cut, which will enable more people to get on to the housing ladder. Our Help to Buy scheme will also encourage more aspirational young people to buy their first home.

[Chris Ruane (Vale of Clwyd) (Lab)]

11. What proportion of recipients of tax credits are in employment.

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[Henry Smith (Crawley) (Con)]

15. What steps he has taken to support people with savings and pensioners.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

This Government are determined to support savers and pensioners—unlike the last Government who gave them miserly increases in state pensions. Since 2010, we have delivered the biggest-ever increase in the individual savings account allowance and for pensioners the triple lock means that they will receive about £560 more in 2015-16 than under the last Government’s policy. We have also given pensioners the freedom to choose how and when to access their own pension.

[Henry Smith]

My hon. Friend is right that the previous Administration caused the great recession, which has meant that savers in Crawley have suffered considerably. Last week’s autumn statement proved that this Government stand up for the aspiration of passing on savings to our children.

[Andrea Leadsom]

My hon. Friend is quite right. He will be as delighted as we are that we are now allowing people to pass on their unused ISAs to their spouse or civil partner free of tax, and their defined contribution pension schemes are also to be free of tax to their successors. This was a great move, allowing people to decide what they do with the money they have saved during their lifetimes.

[Helen Jones (Warrington North) (Lab)]

Most pensioners in my constituency do not have enough savings to put money in an ISA, but can the Minister confirm that owing to recent measures announced by the Government, those who receive the savings element of pension credit will, because of its interaction with pensions, receive only an 87p rise?

[Andrea Leadsom]

The hon. Lady should welcome the fact that this Government introduced the triple lock for pensioners to ensure that, instead of under the last Government when they received only the increase in average earnings, pensioners under this Government will receive an element for inflation, average earnings or 2%, whichever is the higher.

[Mr David Ruffley (Bury St Edmunds) (Con)]

16. What recent representations he has received on the introduction of new fiscal rules to limit government borrowing.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The Government will shortly publish the revised charter for budget responsibility, which will set out new fiscal rules in detail. As the Chancellor said last week, there is more to do, but our long-term economic plan is working. The deficit is forecast to fall this year, down from what the Office for Budget Responsibility described as the post-war record deficit of 10.2% of gross domestic product in 2009-10 to 5% this year—cutting it in half.

[Mr Ruffley]

I thank the Minister for that reply. I commend the autumn statement, in particular chart 1.9 therein, which makes it clear that any Government who wish to reduce debts as a share of GDP to under 40% in the next 20 years will not merely have to balance the budget, but to run a surplus of 1% of GDP on the budget. Does my hon. Friend agree with me that it is essential that new fiscal rules are created and voted on frequently to achieve this massively important debt reduction?

[Andrea Leadsom]

My hon. Friend is right. The Opposition talk about balancing the books, but in fact what they are talking about is borrowing more once their current budget is in surplus, and that is a complete fabrication, because what the Opposition need to recognise is that the only way to return this country to prosperity is not just to deal with the massive debt left by Labour but also to get our economy back into long-term growth and long-term surpluses. [Interruption.]

[Mr Speaker]

Order. It is very disorderly for Members to yell at the Minister from a sedentary position, and I remind you, Mr Lucas, that you have still got to complete your apprenticeship to become a statesman. I keep updating the House on progress, but there is still a little distance to travel.

[Bill Esterson (Sefton Central) (Lab)]

Many people in work are relying on benefits just to survive, and they are not paying tax, all of which contributes to the reason why the deficit has gone up more than the Minister, and her Government when they came in, promised. Today’s OECD report says countries that promote equality will grow and prosper. Will she accept that her Government have got it disastrously wrong for so many people and adopt the policies suggested by the OECD, including a higher rate of top tax?

[Andrea Leadsom]

I find it absolutely extraordinary that the hon. Gentleman can talk about the under- achievement of this Government. It is not by chance that our economy is the fastest growing in the G7; it is not by chance that there are 2 million more people in work in the private sector; and it is not by chance that there are now 2 million apprentices, as of today. It is extraordinary that the Opposition do not see that it is all about economic recovery, not interfering and borrowing more.

[Mr Speaker]

As usual we are pressed for time, but I cannot allow excessively long early questions and answers to deny Members who have been waiting patiently, so we will now hear, I hope, from Mr Philip Hollobone.

--- Later in debate ---

[Ian Paisley (North Antrim) (DUP)]

Was the Chief Secretary as alarmed as I was by this morning’s comments by the Northern Ireland Attorney-General that the Royal Bank of Scotland has been involved in “criminal fraud” with regard to its banking treatment of those who fell behind in their mortgages? If that is the case, will he make a statement to the House, telling us how he intends to deal with the matter so that we can bring back certainty to customers?

[The Economic Secretary to the Treasury (Andrea Leadsom)]

This Government take very seriously any accusations of wrongdoing by the banks. We will be looking at this case. As the hon. Gentleman knows, those comments have been strongly denied by RBS, and we will certainly be taking advice on the matter and looking into it carefully and taking appropriate action.

[Several hon. Members]

rose—

Free Cash Withdrawals

Andrea Leadsom Excerpts

Monday 8th December 2014 Commons Chamber

[The Economic Secretary to the Treasury (Andrea Leadsom)]

I congratulate my hon. Friend the Member for Bristol North West (Charlotte Leslie) on securing this debate on an incredibly important matter. She has presented her case very eloquently.

I assure the House that this Government are committed to helping ensure the most vulnerable people in society have access to the banking services they need. That is why we took action to tackle payday loans, placing a duty on the Financial Conduct Authority to impose a cost cap. The Treasury, as widely reported, has been in discussions with the banks on improving the minimum standards for basic bank accounts. Only a few weeks ago, I hosted a round-table meeting with senior executives from the UK’s major banks. As part of that discussion, I set industry the challenge of coming up with new and innovative ways in which ATMs can be used to offer a wider range of banking services to consumers. I look forward to hearing back from the banks later this month. One of the most fundamental banking services—the subject that my hon. Friend has raised—is the ability of customers to be able to withdraw their own money conveniently, and free, at ATMs.

Forty-four years ago, the Enfield town branch of Barclays bank opened the first ever automated cash machine in the world—another first for the British retail banking industry. Since then, the ATM sector in the UK has been in a state of constant progress. The number of cash machines has grown from 36,000 in 2001 to over 67,000 this year, making cash far more accessible to customers. The number of free-to-use ATMs is at an all-time high, and over 97% of all ATM cash withdrawals by UK cardholders are made free of charge. Pay-to-use machines now account for only 3% of the total volume of transactions.

It is important to recognise that, in areas with greater need for free-to-use ATMs, LINK—the network that connects the UK’s ATM machines—provides subsidies to ATM providers to allow them to offer services under its financial inclusion programme. The LINK scheme is unique in Europe: it allows banks and building societies to give their customers access to cash from any ATM across the UK, no matter which bank they hold an account with. That gives customers universal access to their cash without the need to walk into a bank. Across much of the rest of Europe, pay-to-use machines are the norm and the cost of withdrawing cash is not transparent. By contrast, as I have said, the vast majority of machines in the UK are free to use, and those that are not must be very transparent with their pricing, as per LINK rules, so ATM customers typically get a good deal in the UK.

As my hon. Friend has pointed out, however, some cash machines do charge customers for the withdrawal of cash. These machines are typically operated by independent, non-bank providers, which install ATMs in areas with a low footfall and that tend to be in rural or less well-off communities where banks feel it is not commercially viable to operate a free-to-use machine. The fees they charge need to be completely transparent prior to the customer withdrawing cash, and ensuring that the service is commercially viable is the reason for independent ATM machines charging those fees. If independent ATMs could not charge, they might withdraw entirely from these sites, which would risk leaving the rural and more vulnerable communities with reduced access to cash.

I completely understand, however, the concerns of my hon. Friend and the hon. Member for Strangford (Jim Shannon) regarding pay-to-use machines in less well-off communities. I am well aware that it is precisely in those disadvantaged communities that people most need affordable cash machines nearby without having to take public transport several miles to use one. Many hon. Members have made compelling cases for areas in their own constituencies. The right hon. Member for Birkenhead (Mr Field) has made representations to me in the past.

I am pleased to inform hon. Members that a programme of work is under way to address exactly that issue. LINK has developed the financial inclusion programme, which sets up free-to-use ATM machines in areas where they are most needed. The programme provides subsidies of £1 million per annum to ATM operators to allow them to operate commercially viable free-to-use ATMs. The cost of this subsidy is shared out among LINK members. Through the programme, 1,400 target areas, mainly in rural and less well-off places, have access to an industry-subsidised ATM. In the remaining difficult locations, such as areas with low population or those with a lack of suitable installation sites, LINK has launched specific, individual projects to address that and reports regularly to the Government on progress.

[Jim Shannon]

ATMs could be set up in post offices, because there are lots of them. There have been some discussions about this issue with the banks in Northern Ireland. Has the Minister given any consideration to setting up ATMs in post offices, where they would be accessible for people in rural communities?

[Andrea Leadsom]

I am grateful to the hon. Gentleman for raising that very good point. In fact, precisely one of the challenges I gave to the banks during my recent round table with them was to look at what more they could do to put ATMs in easy to access sites such as post offices and supermarkets.

My hon. Friend the Member for Bristol North West is quite right to question the fairness of pay-to-use machines in less well-off areas. However, where customers feel that an area lacks a free-to-use ATM, LINK has made a commitment to assess that location for the suitability of establishing one. As the number of target sites reduces, LINK also has a programme of identifying new segments of consumers for whom there may be access issues. LINK is working with Age UK and Toynbee Hall on specific projects, such as the “Older old” and “Deprived inner-city housing estates” projects, which aim further to improve access to cash for those more vulnerable members of society.

My hon. Friend’s mentioned that Lockleaze in Bristol North West has just one pay-to-use cash machine for 10,000 people. I have looked into the case, and I agree that it is absolutely unacceptable. My officials have contacted LINK, and I am pleased to say that, as she pointed out, it has committed to bringing the area into the scope of its financial inclusion programme. LINK has offered to visit the area to understand any further issues that her constituents are facing in accessing cash and locating free-to-use ATMs in the area.

In conclusion, I believe that the ATM sector is currently working well for consumers. The number of pay-to-use machines is low—only 3% of transactions are made from those ATMs—and the availability of free-to-use machines continues to rise. LINK membership rules offer consumer protection, particularly with regard to transparency of fees. The industry is taking action. For communities that have a greater need for free-to-use machines, LINK is setting them up in many places, and it is looking at how it can help segments of society that currently have difficulties.

I again thank my hon. Friend for raising this important issue and for bringing it to the attention of the House. I assure her that the Government and I will stay closely involved in this issue.

Question put and agreed to.

Financial Conduct Authority Redress Scheme

Andrea Leadsom Excerpts

Thursday 4th December 2014 Commons Chamber

[The Economic Secretary to the Treasury (Andrea Leadsom)]

I join the long queue of Members congratulating my hon. Friend the Member for Aberconwy (Guto Bebb). His leadership has been a sign of Parliament at its best. We are trying to deal with a very real problem and like a terrier he has stuck to it, for a few years now, to shed light on an issue that has shown the banks at their very worst. I am delighted that so many Members have attended the debate. I congratulate them on showing great generosity of spirit in being here and putting the case for their constituents.

I would like to start by pointing out, as other hon. Members have, that progress has been made. This is the first time there has been a voluntary redress scheme on this scale. All of us were disappointed at its slow start, but we are very pleased that the review has progressed well. I can tell the House that 17,000 SMEs took part in the review. Some 91% of sales were deemed to be non-compliant, which is a totally shocking statistic. Some 14,000 cash offers have been made and more than £1.5 billion has now been paid out to the more than 10,000 SMEs that accepted the offer. That progress is significant, but Members are right to point out that there is a cohort of people who have not yet received the attention or the fairness to which they are absolutely entitled. I am not here to be an apologist for either the banks or the FCA, which is running the redress scheme. I can assure all Members that if they write to me about individual cases I will be happy to investigate further on their behalf.

[Dr Phillip Lee (Bracknell) (Con)]

I spoke a short time ago to Jonathan and Katie Friedman, constituents who live in Finchampstead. A building society, not a bank, sold them a hidden swap product not covered by this redress scheme. Building societies trade on the basis of being ethical? Does the Minister agree that this is hardly ethical behaviour by a building society?

[Andrea Leadsom]

I cannot comment on individual cases in the Chamber, but if there has been wrongdoing, the Government absolutely do not condone it, and the redress scheme is designed to provide compensation and fairness. We are determined that it will do that.

[Paul Farrelly]

Progress is undoubtedly being made, but that does not mean that lessons should not be learned. The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) rightly asked the Minister whether she would look at each of the cases named in the House. I urge her to do so. In addition, she should review the scheme and the way in which it was set up, leaving small businesses such as DK Motorcycles with no right of appeal. Will she commit to giving such businesses some hope of effective redress in the future?

[Andrea Leadsom]

I will certainly write to the FCA about all the cases raised in the Chamber today—and I will expect a reply.

[Mr Bellingham]

The key point is that some of the commercial loans—fixed-rate tailored business loans with hidden swaps—are not taken seriously by some banks. Indeed, some people in the FCA are saying that those loans are not regulated, so it would be very helpful if she looked at that point with the FCA.

[Andrea Leadsom]

Tailored business swaps were provided by largely Yorkshire and Clydesdale bank, which has voluntarily agreed to look at redress in a similar way to that in which the interest rate swap redress scheme works.

I want to move on because there is another debate to follow. Let me address some of the questions raised by my hon. Friend the Member for Aberconwy. He asked why some banks are not splitting the original loss and the consequential losses, and he pointed out that the amount of redress paid is inconsistent between banks. He mentioned the fact that a particular whistleblower says that banks have pressurised independent reviewers to serve the banks’ interests rather than those of the SME, and argued that the FCA is not showing the bank-by-bank redress numbers. He asked whether we should set up an appeals process for reviewers to look at each other’s banks’ reviews, and spoke about the lack of payment of consequential losses beyond the 8% that is normally provided. He addressed the issue of HMRC’s tax treatment of redress and of whether embedded swaps should be included. I want to run through those issues very quickly.

I can assure my hon. Friend and all Members that the FCA has been determined throughout the process to get to the bottom of this. Occasionally, Members might think that the FCA is not interested or not keen to resolve the matter, but that could not be further from the case. In particular, the FCA carefully considers any variance in redress offers to make sure that standards are applied consistently. It selects individual cases for review based on feedback from customers, campaign groups and MPs to ensure these have been dealt with fairly. Independent reviewers report regularly to the FCA, both on the judgments they are making and on how the banks are performing, and independent reviewers regularly meet each other to ensure a consistent approach to assessing claims.

My hon. Friend referred to the agreement between the FCA and the participating banks. As I understand it, this agreement sets out the principles of how the review should have been undertaken. I understand, too, that the FCA is prohibited from releasing these agreements by confidentiality restrictions. I can assure Members, however, that I will write to the FCA and ask for clarification, bearing in mind Members’ desire to have that made public if possible.

[Ian Swales]

The Minister has talked about the independence of reviewers. Even the FCA’s notes state that it has had to require banks to change independent reviewers when there has been a potential conflict of interest. It is clear that reviewers are not always as independent as they should be. What is the Minister doing about that?

[Andrea Leadsom]

The FCA has considered whether reviewers are independent, and the instance cited by the hon. Gentleman probably demonstrates that it is actively taking part in that process. As I have said, however, if Members want to raise particular cases with me, I will look into them.

My hon. Friend the Member for Aberconwy referred to the allegation by a former independent reviewer from KPMG that the banks had applied undue pressure for a change in a redress determination. That is a very serious claim, and I know that the FCA has taken it very seriously. The regulator has given a reassurance that it has maintained close oversight of the relationship between banks and their independent reviewers throughout the review, and that it does not believe that that allegation is supported by the facts.

A number of Members raised the issue of embedded swaps. It is important to define that term. I understand it to refer to fixed-rate loans with an economic, or mark-to-market, break cost. As is standard practice with fixed-rate loans, a break cost is incurred by a borrower who pays off a loan early. The tradition in the United Kingdom has been that the terms and conditions of contracts between businesses, such as loans, are not generally prescribed by the Government, and we normally expect businesses to take positive action. First, they can complain to their banks if they are unhappy with their fixed-rate loans, and many customers have already taken that route. The FCA monitors banks’ complaint-handling processes, and takes action if it sees a problem. Secondly, smaller businesses can have recourse to the Financial Ombudsman Service.

What is vital—and the Treasury has ensured that this will happen in future—is that when a business enters into a fixed-term loan, the terms of the contract and, in particular, the way in which break costs are calculated are absolutely clear. We have secured a voluntary agreement, through the British Bankers Association, that banks will provide the same level of disclosure of features within fixed-rate loans— such as break costs—as applies to interest rate hedging products. Most important, the banks will ensure that break costs are fully explained, and that worked examples are provided.

A number of Members also voiced concerns about the number of businesses that have been assessed as sophisticated and therefore fall outside the scheme. The Government have made it clear that when a business lacks the necessary skills and knowledge fully to understand the risks posed by these products, it should receive appropriate redress. So far, about a third of businesses have been deemed to be sophisticated and to fall outside the scheme. There has been criticism of that: many have suggested that all businesses should be covered. The Government believe that there needs to be a defined cut off-point at which more sophisticated businesses take responsibility for understanding the products they are purchasing. Failure to introduce that cut-off point would weaken the incentives for businesses to act sensibly when purchasing financial instruments, and could open the floodgates to any businesses that had lost out as a result of a financial transaction.

However, the FCA has amended the way in which the sophistication test criterion can be applied, and information about that is available. Time does not permit me to give every detail of where we started and where we are now, but the aim has been to ensure that all businesses that are unsophisticated can fall within the scheme. There may well have been some incorrect reassessments, but there have been very few subsequent complaints.

[Bill Wiggin]

Will my hon. Friend give way?

[Paul Farrelly]

Will the Minister give way?

[Andrea Leadsom]

I will give way once more, but not, I am afraid to the hon. Member for Newcastle-under-Lyme (Paul Farrelly), because time is short.

[Bill Wiggin]

It is very generous of my hon. Friend to give way, and I am delighted by what she has said. Can she also reassure the House that the number of employees will not be a criterion for sophistication?

[Andrea Leadsom]

I can certainly tell my hon. Friend that the number of employees is a factor, but it is not necessarily the only factor, so the fact that a business has more than 50 employees may not necessarily make them a sophisticated investor.

[Paul Farrelly]

rose—

[Andrea Leadsom]

I am sorry, but I will not give way.

Many Members have mentioned the financial ombudsman scheme’s money award limit that it is able to offer to customers. This level was deemed to be most appropriate. It does ensure that most complaints made by consumers and micro-enterprises can be addressed, but reflects the fact that cases involving very large sums of money may be more appropriately dealt with by the courts, rather than an informal process that has limited prospects of appeal.

In the event that the financial ombudsman scheme considers that fair compensation requires payment of a larger amount, it can make a recommendation that a firm pay the balance. That decision on the higher amount is not binding on the firm, but there is evidence that suggests that firms that subsequently go to the courts will find the courts take into account the recommendation of the FOS in determining what the outcome should be.

[Mr Marcus Jones]

Does my hon. Friend not accept, however, that many of these businesses are extremely small and are not in a position to go to law to see the ombudsman’s recommendation backed up, and that therefore the ombudsman’s remit in terms of the damages it can impose needs to be wider?

[Andrea Leadsom]

I agree with my hon. Friend in principle, but, as I have just set out, the intention has been that the sophistication test captures those who are not sophisticated as well as those businesses that are small and do not have the means to go to the courts. In addition, if they have been to the FOS, the intention is that that would cover the vast majority of cases. As I have said, I urge Members to write to me with any specific cases that they want me to look at.

[Paul Farrelly]

Will the hon. Lady give way?

[Andrea Leadsom]

No, I am sorry. The hon. Gentleman has had many opportunities.

It is important to note that the aim of redress is to put the customer back in the position they would have been in if a mis-sale had not taken place. The FCA has been clear that the appropriate redress for each customer will be determined on the basis of what is fair and reasonable. This could include, for example, the replacement of an existing product. That might be appropriate in the case of a business that was highly leveraged. In these instances, it seems reasonable that redress can consist of providing the small business with the alternative product they would have purchased, and refunding the difference in costs incurred by the business as a result.

Members have raised the question of whether there should be a separate appeals process. I would, however, reiterate that the role of the independent reviewer is to be that appeal—to ensure that the process is fair and businesses have adequate opportunity to put their case. Furthermore, eligible businesses have recourse to a further appeal to the FOS if they are not happy with the outcome of their review.

Many Members also raised the issue of Barclays and its decision not to delink the original loss and consequential losses. I think at the moment that that decision is one for Barclays to have made, but after hearing the strength of feeling in the Chamber today I will write to Barclays to ask it to explain precisely why it feels this is fair to customers and to ask it to consider whether it would be willing to conduct its review in a different way. I understand that Barclays has agreed to split the payment for those customers in financial distress, but I will follow that up with the bank.

I shall now return to the specific points Members have made. The hon. Member for Newcastle-under-Lyme raised the case of DK Motorcycles, which failed the sophistication test. He made a very good case in supporting his constituents, and I will take it up on his behalf. He did not say whether the company’s situation was now resolved and he named RBS as the culprit. For many small businesses the new competition being promoted by this Government—the arrival of new banks, particularly in the SME market—will be vital.

My hon. Friend the Member for Redditch (Karen Lumley) named HSBC as the bank in the case of her constituents the Parsons, who had an ethical business. There were significant consequential losses and she felt that the offer made by the bank was not significant. The hon. Member for Dumfries and Galloway (Mr Brown) mentioned Barclays as the bank to the leisure park business in his constituency. He cited fear of talking to the bank as one reason why some small and medium-sized enterprises will not use this redress scheme—they are afraid of the consequences of taking on their bank.

My hon. Friend the Member for Hexham (Guy Opperman) gave an informative intervention, particularly about the risk of having to go to court and the fear of taking on a bank, given the inequality in the resources between a small business and a bank. I take that very much to heart. My hon. and learned Friend the Member for Harborough (Sir Edward Garnier) named RBS as the bank for his constituents Mr and Mrs Hamblin and their property company. He asked me particularly to lean on the FCA to ensure that it is doing a thorough enough job in enforcing the redress scheme, and I am happy to do that.

The hon. Member for Rochester and Strood (Mark Reckless) asked why information on redress is not shared in detail and why consequential loss claims have almost all been turned down. Information on bank-by-bank redress is available but in aggregate form. One reason that has been put to me for that is a sense that if a bank just pays out, there is an implication that they may have been guilty as charged, whereas in fact the ability to offer an alternative product will depend on the bank’s product range and its ability to offer a suitable alternative product. I will look into this further, but that is potentially partially an answer. On consequential losses, 8% of consequential losses is deemed to be sufficient in most cases, but, again, if Members want to write to me, I will look into individual points.

My hon. Friend the Member for Nuneaton (Mr Jones) talked about how linking simple to consequential losses is very unfair. He feels that the Financial Ombudsman Service is not able to enforce enough compensation. He should be aware that FOS is consulting in the new year on that point. He also mentioned the issue of the tax treatment of redress, and I will raise that with Her Majesty’s Revenue and Customs, as a fair point has been made by many hon. Members.

The hon. Member for Ceredigion (Mr Williams) raised the issue of tailored business loans, which I have already addressed.

My hon. Friend the Member for Beckenham (Bob Stewart) raised the case of Mr D’Eye, who was put into the RBS GRG and then administrators were sent in. The FCA is looking at the accusations that have been made about the way RBS has treated small businesses and will report on that in due course.

My hon. Friend the Member for Wyre Forest (Mark Garnier), an ex-colleague of mine on the Treasury Committee, made important points about the cohort of claimants who do not feel they have received justice. He discussed how this is the first major scandal the FCA has had to deal with and said that it should see that it is vital it handles it properly. I can absolutely assure all Members that I will do my best to ensure that that is the case.

The hon. Member for Brecon and Radnorshire (Roger Williams) raised the case of Springdew and how a mis-sale cost the whole community, naming Barclays in that case. The hon. Member for Redcar (Ian Swales) named HSBC and made the point that his constituent Stephen Lilley was sold an extraordinarily complex product. Finally, my hon. Friend the Member for North Herefordshire (Bill Wiggin) raised another case involving UK Acorn Finance, which the FCA is currently looking at closely.

I wish to conclude by saying that SMEs are the lifeblood of our economy, and it is vital that this Government do everything we can to support them. Therefore, I urge Members not only to tell me about specific cases, but to have confidence in the fact that the FCA and the Treasury are determined to get to the bottom of this.