Financial Services Bill

Anthony Browne Excerpts

Monday 26th April 2021 Commons Chamber

I will support the Lords amendments, and I hope the Minister will take it in the good spirit in which it is meant when I say that I will continue to lobby him on these issues, because I know that he does want to get this right. Currently, however, there are still too many unknowns about what will happen next, and without that action—without that clear commitment, on tackling not just consumer detriment but climate change—we will always be playing catch-up. Our constituents need and deserve nothing less than for us to take this forward and be world leaders.

[Anthony Browne (South Cambridgeshire) (Con)]

I will keep my remarks short, because I know it is late and we have a lot of work to do.

There are many amendments to welcome from the other House, particularly the regulation of “buy now, pay later” by the Financial Conduct Authority, where there is clear risk of consumer harm. The Proceeds of Crime Act 2002 is a remarkably ineffective piece of legislation but it is right that it is extended to e-money, as there is a clear loophole there. On cashback without purchase, there is no risk of consumer detriment there and we need to increase access to cash. It is right that it is brought outside the FCA’s remit.

On Lords amendment 1 and the duty of care, I spent five years of my life trying to get the banking industry to improve the care given to vulnerable customers, and clearly many consumer harms carry on. I launched schemes, actually in this House, for the banking industry to help customers with cancer and customers with Alzheimer’s. I am very attracted to the idea of some sort of blanket duty of care, but I do not support this amendment, for two reasons. The first is that, as written, it is so wide-ranging that there would clearly be massive unintended consequences, which even vulnerable customers would live to regret. The second is that, as the Minister said, the FCA already has very wide-ranging powers, almost certainly enough to deal with all the consumer harms that need to be dealt with. I very much welcome the Government’s move, through their amendment, to push the FCA to look at how to reduce consumer harm and implement an effective duty of care.

On Lords amendment 8, mortgage prisoners absolutely need help. They have suffered massively, through no fault of their own, losing tens of thousands of pounds, if not more. We have rehearsed all the arguments tonight for and against this measure. We agree that we need to help these people, but the question is: how do we do that? The cap of interest rates is, as people say, a sticking plaster—even its supporters say that. I can see the appeal of it, but this sticking plaster comes at great cost: Parliament would be setting out interest rates in primary legislation. That could lead to huge unintended consequences in lots of ways—for example, through the impact on financial stability that we heard about earlier on some of the firms. It would also set an extraordinary precedent, with the Government doing price controls in that way. One does not have to be an historian of the 1970s to know of all the dangers of price controls.

It is also really not the solution we need. Where someone is trapped in a horrible prison with their guards abusing them and they are very uncomfortable, would they want that prison to be made more comfortable and the guards to behave themselves, as this cap in effect proposes, or would they want to get out of the prison? They would want to get out of the prison. We need to make sure that mortgage prisoners can move to other mortgage providers. That should apply to all people who are mortgage prisoners, including those who are in arrears, for the reasons that my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) set out. This is very complicated stuff. There are lots of reasons why people cannot move, whether it is their loan-to-value ratio or their income stream, or because they are in arrears. It is absolutely right that they should be helped to go to regular mainstream mortgage lenders that are offering other suppliers, and I very much welcome the Government move to really push on that, working with the FCA. I take on trust their commitment to really push in that direction and get a solution to that for all the mortgage prisoners.

For those reasons, I am happy to vote against Lords amendment 8, so long as the Government do everything they can to help those prisoners.

[Christine Jardine (Edinburgh West) (LD) [V]]

I, too, will keep my remarks brief. In the debate tonight I, on behalf of the Liberal Democrats, will be opposing the Government’s motions to disagree with Lords amendments 1 and 8.

In particular, I would like to focus my comments on Lords amendment 8. This amendment would offer significant relief, I believe, to thousands of so-called mortgage prisoners caught in a vicious cycle of debt through no fault of their own. We have already heard the arguments rehearsed and some terrible stories of what they have been through. All that has been the result of the original decision, after the collapse of the mortgage providers, to sell off those mortgages to investment funds, and that has left as many as a quarter of a million homeowners trapped in spiralling mortgage costs for more than a decade now.

It is a situation that the Government have failed to address, even though there is clear evidence that it is jeopardising wellbeing. A recent study found that mortgage prisoners experienced higher rates of physical and mental health problems, and that they are up to 40% more likely to default as a result of coronavirus. The significance of this amendment is that it would finally unlock this trap and offer an escape from the nightmare of the past decade. Significantly, it would lower interest payments through a cap on the standard variable rate of interest for mortgage prisoners who are borrowing from a firm that no longer lends to new customers. The cap would be no higher than 2% above the Bank of England base rate, which is currently a mere 0.1%. It would also require lenders to offer mortgage prisoners new fixed interest rate deals in certain circumstances—for example, if they have kept up with payments in the past 12 months, if they have an outstanding loan amount of over £10,000, or if they have not received consent to let the property.

The misery caused to tens of thousands over the past decade and the continuing threat it poses demand that we act. We have heard tonight why. To me, it seems simple. It seems the correct thing to do, and therefore I strongly urge the House to reject the Government’s motion to disagree with this amendment—Lords amendment 8 —as well as with Lords amendment 1.