Draft Payment Accounts (Amendment) (EU Exit) Regulations 2018

Anneliese Dodds Excerpts

Wednesday 19th December 2018 General Committees

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I am grateful to the Minister for his helpful explanation.

Once again, we are in a Delegated Legislation Committee debating a Treasury-related statutory instrument that makes provision for the financial regulatory framework after Brexit in the event that we crash out without a deal. In each of those debates—there have already been many—I and my Labour Front-Bench colleagues have spelled out our objections to the use of secondary legislation in this manner, as well as the challenges of ensuring proper scrutiny of the sheer volume of legislation that is being passed. We have expressed frustration many times that we must spend time and resources creating a framework that might never be used. The fact that, as of last night, an additional £2 billion will be spent on no-deal planning, all for the sake of a dangerous game of brinkmanship, is not lost on those whose schools, hospitals and other public services are struggling.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

It is disappointing to hear the tone the hon. Lady is striking. Does she not see that this is sensible contingency planning, as the Minister set out? We need to be ready for all eventualities, and that is exactly what we are doing. I look forward to her constructive comments on this measure.

[Anneliese Dodds]

I have spoken in many of these Committees, and I will go on to speak constructively about the details of the measure. However, I reiterate that there is considerable concern in the nation about what is happening. To many of us, the prospect of no deal appears closer than it has in recent days, and that is enormously concerning. If we cannot reflect on that concern in this House, I do not know where we can. I believe we do a service to our constituents—businesses as well as individuals—by expressing their worries. [Interruption.] I beg your pardon? I think the hon. Gentleman wants to say something.

[Michael Tomlinson]

I said we just need to be ready for it.

[Anneliese Dodds]

I absolutely agree—of course we need to be ready for it. That is why the Opposition have spent so much time going through, to the extent of our abilities, every piece of delegated legislation that has been delivered to us. There will be up to 70 pieces of delegated legislation relating to financial services, so that has been a challenge. Much of that legislation has been delivered at the last minute, without the appropriate documents alongside it and so on, but we are doing our very best to make sure that we are as prepared as we can be in the event of no deal, given the considerable disruption it would create for us all.

Much of this particular piece of delegated legislation is straightforward and merely amends existing legislation to create regulatory equivalence. None the less, I have a number of questions for the Minister. The first issue is the gap in reporting between the potential no-deal date and 2022. I am unclear why regulation 13(b) will omit regulation 43(1)(b) of the Payment Accounts Regulations 2015, which commits the FCA to reporting back to the Treasury every two years on

“compliance by the Money Advice Service with the requirements of regulation 12”

of the 2015 regulations. Regulation 12 states:

“The Money Advice Service must provide consumers with access, free of charge, to a website comparing fees charged by payment service providers”.

There is no indication in the 2015 regulations, or in the draft regulations we are considering, why that is in any way necessary or in keeping with the rest of the measures. Perhaps the Minister will explain that.

I note that Baroness Drake raised the issue of the transparency of fees and charges in the other place, but the Minister there did not respond to her question, although he responded to other issues she raised. Will this Minister explain why an alteration is being made in that regard when, in theory, as he said in his introduction, this measure is meant to be a simple transposition of responsibility?

The second issue is that, at least as of this lunch time, the impact assessment has still not been published, despite the fact that this SI was debated by the Lords last week. Will the Minister explain why it has not been published and why we are being expected to pass a measure when we have not even seen an impact assessment? That approach is becoming common across Government, and it is a worrying development. Just last night, we saw that, in relation to the most fundamental power of a Government—the ability to deprive people of their liberty; in that case, people who are mentally incapacitated—an impact assessment was provided only the day before, and it was already out of date.

We have procedures in this House to prevent the passage of flawed legislation and ensure democratic scrutiny. The Opposition are well aware of the pressure that our civil servants are under. They are working in incredibly difficult circumstances, which the Government created. We cannot stand by and let our capacity to scrutinise measures be reduced by information not being made available to us. I hope the Minister will inform us when the impact assessment will be provided and explain why it was not available before the Committee sat or the Lords considered this measure.

Baroness Drake pushed the Minister in the other place on the impact this SI may have on UK citizens resident in other EU countries. We are all aware of the necessity of bank accounts for everyday activities. Even with the two months’ notice period that the Government have stressed applies to this measure, it is worrying that banks could close accounts in the event of no deal. The Minister in the other place seemed to suggest that would be a commercial decision, and this Minister suggested it would be at the discretion of banks—I think that was his terminology. Will he provide deeper assurances that the Government will consider the people who may be negatively affected? I appreciate that there have been conversations—to use his language—but we need something stronger.

In the other place, we were informed that only a very small number of people would be affected, but the impact could be very significant. As my counterpart in the other place, Lord Tunnicliffe, rightly stated,

“for the people it affects, it affects them 100%. If you cannot get a basic bank account, that is pretty close to catastrophic in the modern world”—[Official Report, House of Lords, 12 December 2018; Vol. 794, c. GC88.]

I am not sure about the situation in the UK, as I have not been in that situation myself, but in other countries it is difficult to conduct certain transactions without a domestic bank account. Paying Government bills or bills to public service providers can get very complicated without a domestic bank account. Even with the international bank account number system, it is still very difficult.

I can imagine a UK citizen resident in an EU27 country needing a UK bank account to pay for services or goods consumed by an elderly parent—almost like an emergency bank account. If that account were closed, the UK citizen would have the hassle of searching around to find another bank that was capable of providing an account to them. Presumably, they would have to do that on their own—they would need to shop around themselves, potentially at a time when they were nervous about their ability to use their existing account over the next two months and about needing to get a new one to pay for the items their parent required.

Will the Minister consider asking the FCA or another body, if such circumstances arise, to ensure that people who are affected by closure of their account can at least access information about which other providers may be willing to provide such an account to them as residents in the EU27? Will he look at ensuring that there is some continuing availability if all the banks decide that, commercially, it is not worth the candle and they do not want to provide an account? That may be the outcome.

The Minister in the other place stated that, although there had not been a formal consultation process about these measures with consumer associations beyond sending them the SI and accompanying information, he suspected that there might have been some contact from consumer organisations following the debate in the other place seven days ago. Will the Minister tell us whether there has been contact with consumer organisations? If so, what was their feedback? Are they happy with the change? We need that kind of information before we can be happy with this measure.

--- Later in debate ---

[Robert Jenrick]

Well, let me answer the questions asked by the hon. Member for Oxford East. She mentioned the gap in reporting between exit day and 2022. That is because the Money Advice Service reports to the Treasury, which then reports to the European Commission, and it is that provision that is deficient. I assure the hon. Lady that there are no changes to the requirement for the Money Advice Service to host a price comparison website—that has already been launched—so to answer the question that she perfectly understably asked, there should not be an issue.

There is no reduction in the requirement for transparency on fees. The only change is that the FCA is taking over responsibility for the regulation of the documents from the European Banking Authority. We have of course worked with the FCA, so I can say in answer to the hon. Member for Glasgow Central that it is willing and ready to take on those responsibilities.

On the wider question about UK citizens living in the EU27, we expect the number of individuals affected by the measure to be very small. We have had conversations with banks on the arrangements that we will put in place; the hon. Member for Oxford East mentioned the subject. It is worth remembering, as I said in my opening remarks, that any individual legally resident in an EU27 country will have the right, under EU law, to access a basic bank account in that country. If they had been using their basic bank account from the United Kingdom solely, and then no longer had access to that—an unlikely scenario, and one that would affect a very small number of individuals—they could, as of right, open a basic bank account in the country in which they are legally resident. We see no reason why they would not be able to do that.

[Anneliese Dodds]

I am grateful to the Minister for that explanation, but surely the question is not whether certain people would become completely unbanked as a result of the changes, but whether they could still carry out the kind of transactions that are very difficult to do, in whatever country, unless one has a domestic bank account. If one does not, it can be very difficult to pay certain kinds of bills and make certain kinds of transactions and so on—and there are normally additional charges involved.

[Robert Jenrick]

Those people would be able to open a bank account in the UK at the commercial discretion of a UK bank. We do not think there will be many, if any, examples of individuals having their bank account withdrawn, but of course it is technically possible that a bank might choose to do that. We think it is unlikely that these individuals would continue to use their UK-based bank account as their sole current account. If, say, a Spanish student came to study in the United Kingdom, opened a UK basic bank account and then returned to Spain, it would be a costly bank account for them to continue to use as their current account, because they would have to pay currency charges whenever they transferred money. The situation that the hon. Lady alludes to would apply only in a limited number of circumstances. I take her point that there could be such circumstances, but we do not think there will be a substantial number.

It is worth remembering that our duty in this instance—I am sure the hon. Lady would support this—is to maintain equivalence, not make policy changes. We are ensuring that any individual resident in the UK will have access to a basic bank account, but we are not making a change to ensure that UK citizens resident in third countries can have access to a UK basic bank account; that would be a policy change, because it would of course be applicable beyond the EU27 to any country in the world in which a UK citizen might choose to reside. I hope that she is reassured that our intention is to act within the confines of the law—not to go beyond it and take action that might apply to a British citizen resident in, for example, Canada or the United States who wished to maintain or open a UK basic bank account.

The hon. Lady also asked a question about consumer organisations and industry consultation. In drafting the statutory instrument, the Treasury engaged confidentially with industry representatives to make them aware of these changes, and to allow them the opportunity to comment on any of them. We have not received any queries or comments on the proposed changes from those groups, or from any consumer groups, since publication, so we can only assume that they are content, but of course we will continue to work, and to be open to comments, should any come forward in the weeks and months ahead.

I think that I have answered most of the questions posed by the—

[Anneliese Dodds]

The Minister is being very generous with his time. I believe that I asked when the impact assessment would be forthcoming.

[Robert Jenrick]

The hon. Lady is absolutely right, and I will come on to that as my final comment. First, I will answer what I think was the final comment from the hon. Member for Glasgow Central, in respect of potential discrimination against EU nationals resident in the UK. What she suggests is not the case under this statutory instrument. Any resident of the United Kingdom who is legally resident in the United Kingdom will have access to a basic bank account, just as they would if they were living elsewhere in the EU.