Financial Services Bill (Second sitting)

Andrew Jones Excerpts

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 17th November 2020 Public Bill Committees

[Alison Thewliss]

Thank you very much.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Q Peter, thank you for your evidence and written submission, which has been circulated to the Committee. One thing you say in that is that your evidence points to the importance of statutory protections as a key way to alleviate the harm of problem debt. Could you tell us a bit more about that evidence?

Peter Tutton: We spend quite a lot of time looking at the experience of our clients, and we survey our clients and poll them to see what has happened to them. When we were looking, back in the day, at breathing space we were trying to understand what brought our clients to advice and what helped them to recover. What we found was that our clients often had multiple creditors. On average, they would have about five or six. Typically, we find that some creditors, even most, will be very good, but it only takes one creditor to defect from good practice and to push for more money to destabilise people’s financial situation and restart the process of juggling bills and borrowing more to deal with a particularly aggressive, unaffordable payment demand.

There was a very strong message from clients that that impeded their ability to recover. At the same time, we spoke to our clients who were in the debt arrangement scheme in Scotland, and we got a very clear message from them that that kind of guarantee—the statutory framework that the debt arrangement scheme in Scotland gave them—reduced their anxiety and gave them a really good, strong and solid platform for recovery. They knew that if they paid what they could afford to pay and kept doing that, nothing else bad would happen to them in terms of unaffordable demands and escalating enforcement.

In that sense, we have known for a long time that people need protection from their creditors in certain circumstances. Both the experiences of clients who do not have that protection in England and Wales outside of insolvency and the experiences of clients who do have it in Scotland persuaded us that what has become breathing space in the statutory debt repayment plan was a necessary additional protection that we did not have at the time.

[Andrew Jones]

Q That is very interesting. Do you have any data that can quantify some of the anecdotal evidence that you have just been giving us? If you can, could you please circulate it around the Committee?

Peter Tutton: Yes, I will dig some out.

[Stella Creasy]

Q Peter, thank you for articulating so clearly all the different challenges that we face in trying to prevent debt as well as deal with its consequences. I have a couple of questions about the Bill and some of its provisions, and then about your sense of where we might be able to make some progress in strengthening the protection for consumers from unaffordable debt.

With the debt repayment schemes, I think all of us recognise that the breathing space is a very positive development. First and foremost, I want to ask for your view on the midway review element. Do you have any thoughts on what impact that might have as currently drafted?

Peter Tutton: It is a good question. We were very concerned initially about the midway point, simply because it could be very expensive and hard to administer the debt advice. The provision is now not quite as onerous, so we are not having to do full outbound calls and things like that. We are now reasonably comfortable with it as something that is a touching point, where clients touch in with us to ensure that they are still engaged with the process. That is something we do anyway. If someone has come for advice and there is a recommendation that the next step of a particular debt solution requires them to do further things for us to help them, we will follow up and keep in contact with them to ensure that they do not drop out of the process and that they have some help. The initial relief of having spoken to someone about it can lead people to think, “Well, I’ve got that out that way,” whereas it is important to keep going and get people into the debt solution.

There is some element of the midway review that is not dissimilar from the kinds of things that we would do anyway. The important thing is that the way it is done in practice should not become an onerous burden that does not really have any practical use to it. I think we are sort of there. We are talking to the Insolvency Service about the guidance and the way it will work. I think we will get to a place that we can live with. My operational colleagues who are implementing this are not saying it is unworkable at the moment, so we are reasonably comfortable with it, but time will tell. [Inaudible.] If, six months in, it turns out to have been really onerous with no practical effect, that is something we would ask the Treasury to come back and look at again.

Financial Services Bill (Fourth sitting)

Andrew Jones Excerpts

Committee stage & Committee Debate: 4th sitting: House of Commons
Thursday 19th November 2020 Public Bill Committees

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Q You said that consumers expect different things in different markets. In your briefing note, you said that the Bill will allow the FCA to develop a methodology that is more accurate and that works for the UK market. Can you give an example of a characteristic that is specific to the UK market and how the Bill will help to meet those expectations?

Hugh Savill: If you are buying insurance in the UK, you tend to buy it online for general insurance, or you will quite often use an independent financial adviser to buy life insurance and savings policies. That does not happen on the continent of Europe. There, there is a little shop in most small towns, and people go and buy their general insurance from that shop. If they want savings policies, whether that be insurance or other kinds of savings vehicles, they will go to their bank, so it is a completely different approach and entry into financial services.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Q Thank you very much for giving evidence today, Hugh. One quick question about the market access arrangements: do you think there will be any price implications from those for UK consumers? Could we see price inflation via premiums increase as a result?

Hugh Savill: Sorry, from the market access arrangements, did you say?

[Andrew Jones]

Yes, just generally. We are seeing a large provider have access to our markets. That could traditionally see increased supply. Increased supply tends to mean price competition, with consumers benefiting both in quality and innovation of product and in the price they pay for it, but equally it can work the opposite way. So do you think there will be any price implications for UK consumers as a result of these measures?

Hugh Savill: I do not think they would be because of these measures, in that the suppliers from Gibraltar already have 20% of the market, and it is not this Bill that is going to change that. There will be changes in price—there are always changes in price, and there will be other things that drive that—but I do not think that will be driven by this Bill.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Q You suggested there was a small VAT benefit to companies being based in Gibraltar. Obviously, this legislation would remove any other bar in terms of being based in Gibraltar but still being able to operate in the UK. Could you clarify what you mean by a small VAT benefit?

Hugh Savill: That is why I offered to write. I am afraid I do not know exactly what the VAT arrangements are, and I will have to write it down. If I said any more, I would get something wrong.

Financial Services Bill

Andrew Jones Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Wednesday 13th January 2021 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call Andrew Jones, I should say that after Stella Creasy I will reduce the limit to three minutes.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

The core purpose of the Bill is to ensure that the regulatory framework for financial services will continue to be effective now that we have left the EU. Of course, there are other measures in the Bill, on matters such as the open market arrangements with Gibraltar and debt advice; it is wide in scope.

In Committee, we considered the Bill in detail, and I commend my hon. Friend the Minister for his knowledge and vision. It would be fair to say that some of the measures that we looked at were in very specialist areas and were perhaps a little dry; I am thinking about the work to transition away from LIBOR and implement the Basel standards. That obviously had not been easy work; it had been detailed work, and the development had taken place over a significant period.

The Minister has placed certain underlying principles at the heart of his work, and we see them in the Bill. The first is ensuring that the UK will have world-leading prudential standards, and that those will be overseen by regulators with the powers they need. There is no doubt that the world, including the UK, has seen appalling financial scandals; I am thinking about insider dealing, money laundering and bank fraud. Our regulators must be equipped to deal with this fast-moving market. They must be careful that they are not so backward-looking that they are solving the last crisis, but they are also nimble enough to have proportionate regulations for the sector.

The second principle that my hon. Friend the Minister is operating under is the recognition that different types of activity, and different scales of company, require different approaches. The Bill enables the introduction of the tailored investment firms prudential regime. I believe that the whole Committee wanted to see a firmer approach taken to wrongdoing, alongside measures to ensure that the UK’s strong position in this critical sector is maintained. I think that the Bill does that—indeed, that is the bulk of the Bill—but it does, of course, require regulators to enforce that properly.

A further principle of my hon. Friend’s work is helping people with debt problems. We have already heard about clause 32, which introduces changes to the debt respite scheme. Those are of great significance to many of our constituents up and down the country. Essentially, there are two elements: a breathing space and a statutory debt repayment plan, the point being early intervention and recognition of the problem. That will help people escape the cycle of debt, which is sometimes very easy to get into and very hard to break out of.

In our evidence session, the Committee heard from Peter Tutton, head of policy at the debt charity StepChange. Mr Tutton described this as “a cracking scheme”—I wrote down the quote when he gave us his evidence. That is a significant endorsement of the Minister’s work. The Bill also contains a measure to provide a route for a successor account when the Help to Save term matures, so that the balance is transferred to an alternative savings account—again, practical support that will help many people.

There are many new clauses and amendments before us. I welcome Government new clauses 27 and 28 and new schedule 1, which basically broaden—update, really—the Proceeds of Crime Act 2002 to include e-money institutions. I am pleased to see that that is supported by the Labour party in its own new clause 6, which will not be moved. There is clearly a recognition on both sides of the House that the Act needed to be updated and tackled.

New clause 7, in the name of the hon. Member for Walthamstow (Stella Creasy) and many others, looks at the unregulated “buy now, pay later” market. It is easy to see how an interest-free product could help people spread payments for a sofa or other high-cost item, but it could also be a route into debt trouble. I am pleased that the Minister has commissioned a review, which is due to finish very shortly. May I just ask him to consider its recommendations very promptly?

Overall, this is a good Bill. I thought that the Committee scrutinised it well, and I will support it this evening.