Kinship Carers: Two-child Limit Policy
Baroness Buscombe Excerpts(6 years, 6 months ago)
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Baroness Sherlock
To ask Her Majesty's Government why kinship carers who subsequently have their own child are not exempt from the two child limit.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, the Government acknowledge the immense value of care provided by kinship carers. We are working to ensure that they are supported by enabling them to access benefit entitlement in the same way as parents. We have introduced a number of exceptions to the policy providing support for a maximum of two children, to protect claimants who are unable to make choices about the size of their family. These already protected certain groups, including kindship carers. The department will keep, and is keeping, the impact of its policies on kinship carers under consideration.
Baroness Sherlock (Lab)
My Lords, the reason why kinship carers were exempted from the two-child policy is that this House voted that it should be so. The Minister will be aware of the case, raised by my honourable friend Melanie Onn, of Alyssa Vessey. When Alyssa was 18, her mother died suddenly so she gave up college to care for her three younger siblings. This year, four years later, she has had her own baby. She applied for tax credits and a Sure Start maternity grant but she was turned down under the two-child policy. The reason is that the Government chose to implement the exemption in such a way that if Alyssa already had her own child and then took on her siblings she could get benefits for them, but because she took her siblings on and then had her own baby she was denied that support. Can the Minister explain this? When will the Government put it right?
Baroness Buscombe
My Lords, I think the noble Baroness opposite is aware that we are very much cognisant of this particular case. Indeed, my honourable friend in the other place who is the Minister responsible for this area, Caroline Dinenage MP, has responded with considerable sympathy with regard to this particular case. However, the Government believe all children should be treated equally and encourage parents to take the decision to have more children based on whether they can afford to support additional children.
Baroness Pinnock (LD)
My Lords, do the Government understand and accept that the callous restriction of this policy penalises children by putting a further 300,000 of them into poverty by 2022? Is that government policy?
Baroness Buscombe
My Lords, the Government are looking at this policy at the moment, as I have already said. We do not believe we are being callous. The Government’s view is that providing support for a maximum of two children in universal credit and child tax credit will ensure fairness between claimants on the one hand and, on the other hand, those taxpayers who support themselves solely through work.
Lord Mackay of Clashfern (Con)
My Lords, I had understood when this matter was discussed that the theory underlying the proposal was that those who by their own choice landed themselves with more than two children had to support the extra children with whom they had landed themselves. However, the case that we have just been talking about is not that; there was at the very least a moral obligation for that lady to take her siblings. It would therefore be right to say that it is not in accordance with the principle underlying the proposal that this case should be treated as it apparently has been so far. I hope the Government will reconsider it.
Baroness Buscombe
I have to say that we have already said that we have responded with enormous sympathy to this. The policy is currently under review, but it should also be made clear that the Government have assessed the impact of the policy from an equality and human rights perspective throughout its development and in its implementation, thus meeting our obligations under the public sector equality duty and ensuring compliance with human rights and other international obligations.
The Lord Bishop of Carlisle
My Lords, the Government have chosen to pursue a deficit-reduction strategy by opting for a fiscally cautious welfare policy. However, has the Minister considered that some British families are larger for reasons of faith or principle? Speaking on behalf of people of all faiths in this country, my question is: what plans does the Minister have for ensuring that such families and children are not discriminated against by the policy?
Baroness Buscombe
My Lords, as I have already said, there is nothing to stop anyone having a large family. There is total freedom of choice to have a large family. However, the Government’s view is that we have to be fair between those claimants on the one hand and, on the other hand, those taxpayers who support their own children solely through work.
Baroness Hayman (CB)
My Lords, will the Minister take the temperature of the House on this issue and listen with great care to the words of the noble and learned Lord, Lord Mackay of Clashfern? Can she really defend the Government’s view that this policy, which is a technical misinterpretation of the will of the House and Parliament when it put these provisions in, can possibly be, as she says, fair and in the interests of equality for the children in this or any other family in these very unusual and, I suspect, not very expensive situations?
Baroness Buscombe
Given her long experience and expertise in this House, the noble Baroness will understand that, as a Lords Minister, my position is somewhat constrained. As I said, my honourable friend in another place is very aware of this case, and this policy is being considered as we speak.
Baroness Drake (Lab)
Will the Government honour their promise to this House on 27 January 2016 that children in kinship care should be exempt from the two-child limit on benefits and tax credits? The limit is intended to deter people from having more than two children where they cannot afford them, not to deter or punish kinship carers who take on the care of vulnerable children who might otherwise go into care. That distinction was accepted by the Government. Will they please now implement the commitment that they gave to this House on 27 January 2016, quite explicitly and without reservation?
Baroness Buscombe
My Lords, I ought to make it clear that, as the noble Baroness will be aware, there is no punishment. If a family has already had two children of their own, there is nothing to stop them taking on other children as kinship carers. In that case, those children will be exemptions to this rule.
Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017
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Baroness Buscombe
That the draft Regulations laid before the House on 10 July be approved.
Considered in Grand Committee on 29 November
Improving Lives: The Future of Work, Health and Disability
Baroness Buscombe Excerpts(6 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend the Secretary of State for Work and Pensions in the House in Commons regarding work and health. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on the Command Paper being published today by my department and the Department of Health.
Good work promotes good health. It enables people to be economically independent, and gives them more choices and opportunities to fulfil other ambitions in life. A country that works for everyone needs to ensure that all who can work or undertake meaningful activity have the chance to do so, and that the right care and support are in place to enable all to thrive in work throughout their lives.
Our labour market is in its strongest position for years, with the United Kingdom employment rate at a near-historic high of 75%, and over 530,000 more disabled people in work than four years ago. Despite this, only around half of disabled people are in work, but many disabled people and people with health conditions can and want to work. This means that too many people are missing the opportunity to develop their talents, and to connect with the world of work and the range of positive impacts that come with doing so—including good health and social outcomes. That is why it is important that we act now.
With around one in six working-age adults reporting a disability, it is clear that health and disability issues affect the working lives of millions of people. The majority of long-term health conditions are acquired in adulthood, and in an ageing population, inclusive work places are imperative. That is why, in our manifesto, this Government pledged to see 1 million more disabled people in work over the next 10 years. This is as much about preventing people from falling out of work as it is about supporting them into work. This requires a comprehensive and wide-ranging programme of action.
Last year, we published Improving Lives: The Work, Health and Disability Green Paper, setting out the Government’s new and ambitious approach to this issue; it marked the start of a new era in joint working between the welfare and health systems. Our 15-week consultation on the next 10 years of reform sought input from disabled people and those with health conditions, their families, employers and a range of stakeholders. The consultation was supported by 166 accessible events, and received around 6,000 responses.
Today, we are publishing Improving Lives: the Future of Work, Health and Disability, setting out our response to the Green Paper consultation and the next steps we will take to deliver our vision. Changes in the nature of work and more flexible working models benefit a wider range of people, and new advances in technology offer more opportunities than ever before. For example, accessible hardware and software, and developments in apps and wearable technology, make it easier for employers to offer flexibility and adaptations to their staff. Small businesses and large employers alike are already implementing these solutions for their employees, and it is for government to help to set the direction and stimulate good ideas.
We know that the barriers to moving into work and staying in work are different for each person, depending on the nature of their health condition or disability, their aspirations and individual circumstances. We need to work directly with people who experience these barriers to identify solutions that will work. We want to build an approach that is responsive and caters for every scenario, with the individual at its heart.
The change needed is not one that government can deliver on its own. Across the country, there are striking examples of what can be achieved when employers, charities and healthcare professionals work together locally, but government can help to create the conditions for success. In the workplace, employers should have the confidence to recruit and retain disabled people and those with health conditions, and to create healthy and inclusive workplaces where all employees can thrive and progress. The best employers have already realised the business benefits of hiring disabled people, and while there are many examples of good practice, we want to go further.
This Command Paper responds to what we heard in the consultation, and to the findings of Thriving at Work: The Stevenson/Farmer Review of Mental Health and Employers. We will improve advice and support for employers of all sizes, working in partnership with them—together with disabled people and other stakeholders—to bring together information and advice that meets businesses’ needs. We will also make significant enhancements to the Access to Work scheme, including increasing the capacity of its mental health support service.
To support a key recommendation of the Stevenson/Farmer review, we will establish a voluntary framework approach for large employers to report on mental health and disability within their workforce. We are also preparing a consultation on changes to statutory sick pay, and will run a cross-government programme of analysis and research to examine the incentives and expectations that influence employers’ decisions in this area. We will report back on this preliminary work next year.
We will build on the key role that the welfare system plays in supporting disabled people and those with health conditions to enter work where possible by developing a more personalised and tailored approach to employment support. We will continue to learn; for example, through voluntary trials to help us to build an effective offer of support that meets the needs of those in the support group. We will continue to improve the assessment process while building our evidence base, including working with external stakeholders, to take forward reform of the work capability assessment.
Health and care professionals are vital in supporting disabled people and those with health conditions to achieve their employment potential. We will work with and support health professionals with the tools and techniques they need to have supportive conversations with patients about work and health. We are doubling the number of work and health champions and investing around £39 million to more than double the number of employment advisers in Improving Access to Psychological Therapies services. We will also conduct large-scale randomised controlled trials delivering employment support in a health setting in the West Midlands and Sheffield City Region, beginning by March 2018.
Alongside this Command Paper, I am announcing the next steps for the Fit for Work service. Established in December 2014, it offers general health and work advice to employees, employers and GPs, through a phone line, webchat service and website. Since 2015, it has also provided occupational health assessments for employees at risk of long-term sickness absence, with advice on how they can be supported to return to work and remain in employment. However, referrals of cases to the service by employers and GPs have been much lower than expected. For instance, there have been only around 650 referrals per month in England and Wales, compared to the 34,000 forecast, and 100 a month in Scotland, compared with the estimated 4,200. By contrast, use of the advice line, webchats and Fit for Work website has exceeded expectations. I am therefore ending the contracts for the provision of the assessments service both in England and Wales and in Scotland while ensuring continued access to the Fit for Work online and phone services. These will continue to offer general health and work advice as well as support on sickness absence.
The Government are also announcing the appointment of an expert working group on occupational health to champion and drive a programme of work, taking an in-depth look at the sector. To inform policy development, we have commissioned research to better understand current market supply and delivery of occupational health provision. This research will look at local partnership models to integrate health and wider support, and will report in 2019. We will also take account of the lessons from the Fit for Work service as we move forward.
The Government are laying the foundations for a 10-year programme of change. Everyone has their own part to play to achieve this ambitious vision for a society in which all disabled people and people with long-term health conditions are able to go as far as their talents will take them. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Addington (LD)
My Lords, I thank the Minister for repeating the Statement. It is also time that I declared a few interests that are relevant here: I am president of the British Dyslexia Association and chairman of a company called Microlink PC. That is important because Microlink provides assistive technology and designs support for those who are disabled and in work or education, starting with education.
As I went through this document and scanned the original one it became clear that we have hit the buffers, the point at which a great idea hits the practicalities and starts to fracture in terms of what can be done. My own disability—and the one that the group that I work for is concerned with—is regarded as an education disability. In fact, we are the biggest disability group, as those in the neurodiverse group make up 15% of the population. Very little in this document refers to this group. Our problems relate not to accessing buildings but to accessing systems involving, for example, computers or paperwork. This document does not really seem to have got hold of that. It has missed a group. It has also missed a group when it comes to access problems when dealing with, for example, form-filling and work and pensions support. Therefore, when the noble Baroness talks about assistive technology, will she make sure that every single government website is accessible through the assistive technology of voice recognition? If she cannot answer that, she has effectively already broken the terms of the Equality Act for this group.
To carry on in that vein, we all know that each group considers the problems they have to be the most serious, but other groups will emphasise the importance of other activities. However, one important question is: are people being maintained in work? Access to work—it is one thing that I can give a rousing cheer to—is probably the best kept secret. It is the most underused thing in the Government’s arsenal. Expanding that to support for maintaining people in work and allowing them to expand or change their roles will encourage people to stay on.
We have also been talking about mental health. A person with a disability generally suffers more stress, and stress can trigger or create mental health problems. Are we making sure that people are maintained and supported in jobs and allowed to expand their roles? Once again, I am not absolutely sure about that. There is a great deal of emphasis on getting people into work but not on maintaining them in work and giving them a career into the future. I would like to know where the emphasis is there.
So we seem to be missing a large group—dyslexics, dyspraxics and dyscalculics—and, to a lesser extent, those with high-functioning autism. They do not seem to have been referenced here, probably because, to be perfectly honest, they are a lower priority in the Department of Health. How will we access these groups? How will we make sure that individual support is available and that people can get the right support? Nearly 20 years ago when the noble Baroness, Lady Hollis, was the Minister in charge in this area, I had a ritual dance with her when we talked about the interview. Are the Government going to allow the person who conducts the interview to call in an expert? The interviewer will be awfully well trained but will an expert be brought in? If not, things will go wrong. Unless the noble Baroness can give me an assurance that some expertise will be structured in, the problems will continue. Expertise is needed to deal with the individual cocktail of needs in individual cases. Unless we can start to address these questions, we will continue to fail in this area.
Baroness Buscombe
I thank the noble Baroness opposite for her support thus far in terms of the overall response to the Command Paper, and I will do my best to reply to the many questions that she and the noble Lord, Lord Addington, have raised.
I want to make it clear that I welcome the noble Baroness’s constructive contribution. It is important to say that this is a programme aimed at helping people into work and to stay in work. I say immediately to the noble Lord, Lord Addington, that we will not ignore any group of people or any individuals. That is the purpose of bringing together, to the best of our ability, work, welfare and social interaction. This is a holistic approach which, I think all noble Lords will agree, we have been looking for and waiting for for years. We are very proud that we will be able to focus on work, health and disability as one. We say that work enables every person to be economically independent. It boosts their confidence and gives them more choices and opportunities to fulfil other ambitions in life.
The noble Baroness was very clear in her question about the finances. This is about more than just the over £50 billion that we are spending on those with disabilities or health conditions. As announced in SR15, we are increasing investment in employment support for people with disabilities or health conditions in real terms over this spending review period. This includes building the evidence base for what does and does not work, investing in Access to Work and rolling out a personal support package of tailored employment support initiatives. We have committed to invest £330 million of funding over four years in support for people with limited capability for work as part of the personal support package. Last year, we spent £104 million on the demand-led Access to Work scheme, up from £97 million in 2015-16. The number of people who had Access to Work support last year rose 8% to over 25,000. In addition, further customers received payments for support agreed in previous years.
We are investing up to £115 million of funding to develop new models of support to help people into work when they are managing a long-term health condition or disability. We will be providing an extra £15 million a year in 2017-18 and 2018-19 for our flexible support fund so that local managers can buy services, including mentoring, and better engage the third sector—which is a very important part of this holistic approach—in their community to help disabled people and those with health conditions.
With regard to the work capability assessment, it is important to say that in our manifesto we committed to legislate to give unemployed disabled people and people with health conditions personalised and tailored employment support. We heard broad support for WCA reform proposed in the Green Paper but there was no consensus on what the right model of WCA reform would look like. We know that we need to get reform right and will therefore focus on working with external stakeholders in testing new approaches to build on our evidence base for longer-term legislative change. This will require primary legislation, but noble Lords are all too aware of the constraints that there will be in that regard in the near future. In the meantime, we are delivering on our commitment to personalised and tailored employment support with the introduction of our new personal support package. We are also committed to continuing to improve the WCA. Recent reform included stopping reassessments for people on ESA and UC with the most severe lifelong conditions.
We want to reform statutory sick pay so that it supports more flexible working, which can help people remain in or return to work if they are unwell. With regard to disability employment, we have added 300 additional disability employment advisers and have begun introducing 200 new community partners. We absolutely accept what the noble Lord, Lord Addington, said about the importance of having work coaches with the right expertise and skills, and that is something on which we are very much focusing.
In terms of UC, we are also focusing our efforts and thoughts on in-work progression, which is very important. This is not about helping people into work and then leaving them there; it is about prevention, getting people into work and helping them to remain in work. That is one reason why it is very important that we have this very strong, joined-up approach with our colleagues in the NHS, asking how we can manage mental health, for example, in the short to medium term as well as in the long term. Of course, the Farmer/Stevenson review is an enormous encouragement to us. As noble Lords will know, we have already accepted all its recommendations.
The noble Lord, Lord Addington, asked about assistive technology, and he was absolutely right to do so. One individual who has particular difficulties said, “Without assistive technology such as voice recognition and the help of Access to Work in providing me with a support worker, I would not be able to compete in the job market and therefore would not be in employment”. His name is Tom and he sustained a serious neck injury in 2007. He is now using this brilliant technology and is thriving in work. We want all employers to reach the standards of the best and that is why we will work with them.
I hope that I have begun to answer some of the many questions noble Lords have asked. I reiterate that there are now around 600,000 more disabled people in work since 2014. We are making progress and this Command Paper will contribute to that.
Lord Low of Dalston (CB)
My Lords, I welcome the Government’s objective to get 1 million more disabled people into employment over the next 10 years. The Minister will recall the review, Halving the Gap, which I led with the noble Baronesses, Lady Grey-Thompson and Lady Meacher, with support from disability charities. That review looked specifically at the £30 a week cut to employment and support allowance and the corresponding limited capability for work component of universal credit. Over half of the disabled people who responded to our call for evidence said that the cut would push them further from the workplace rather than closer to it. Does the Minister agree that, in the light of that, it is time to reconsider this damaging cut, which can only have the effect of making it more difficult for the Government to achieve their objective?
Baroness Buscombe
As the noble Lord, Lord Low, will know, employment and support allowance was introduced in 2008 to replace incapacity benefit and income support. Since the ESA, as we call it, was introduced, we have conducted five independent reviews of the work capability assessment and have accepted and implemented the majority of recommendations. As to cuts, we spend more than £50 billion a year on benefits to support disabled people and people with health conditions, an increase of more than £7 billion since 2010. This is 2.5% of GDP and over 6% of government spending. This demonstrates that we are doing all we can to support the very people the noble Lord references.
Lord Sterling of Plaistow (Con)
My Lords, I come at this subject from two directions: I am chairman of Motability, which has been involved in this for 40-odd years; and I welcome this initiative for the simple reason that it is an all-party one that has nothing whatever to do with party politics. Everyone, in both Houses, has empathy with finding answers to these problems and difficulties.
From the Motability point of view, sadly, only 16% of our customers between the age of 16 and 64 have jobs. That happens to be identical with the figure for those with autism. I have a young grandson who is autistic and I have spent a great deal of time looking into some of these difficulties and problems.
One interesting factor is nervousness among the workforce. People do not know and feel nervous about having disabled people working with them. The more that you go round explaining the pros and cons, the better. People are worried about simple things such as, “Suppose he wants to go to the toilet. Who is going to take him?”, or “Where do we do this?”, or “How do we handle that?”. Once the workforce feels comfortable, it can change dramatically.
On the wider front, in the educational field—in the long term as against the short term—it should become law that everyone who teaches, no matter at what level, should know something about how to handle disabled people. A key factor is the huge amount of bullying in schools. If every single headmaster and headmistress of every single school was trained in how to handle disability, it would make all the difference. It should be a rule that they should have this training, otherwise they cannot be a headmaster or headmistress.
I raise that issue because there is a great shortage of educational psychologists. As a society, we try to get everyone else to be what we think is normal, but we do not adapt. If we adapted more closely, it would make all the difference. I cannot support more fully the fact that the Government—and, hopefully, everyone in this House—want to find the right answers.
Baroness Buscombe
My Lords, I thank my noble friend Lord Sterling for his contribution. I commend him and pay tribute to the work that he has done with Motability. The Government recognise the valuable service that Motability provides to those with disabilities and health conditions, and we look forward to continuing to work closely with it.
My noble friend recognises that not enough disabled people are in employment. We feel that we have come a long way, but we have a lot further to go. That is why we have set out this ambitious wish to have 1 million more people with disabilities employed over the next 10 years. That is why it is important that we work with groups such as Motability and others to make this happen.
My noble friend is absolutely right that this is not about party politics. Indeed, in welcoming this report, the Mayor for London said this morning that it is time to put party politics aside on this issue. It is, frankly, too important.
My noble friend referred to making employers less nervous. I agree. That is why we are working hard in that area to encourage more employers to come on board. We have launched the Disability Confident business leaders group and started roll-out of the Small Employer Offer and Community Partners. We know some employers want more help to be able confidently to support disabled people in work, and that is why we will do more to improve advice and support: researching and identifying solutions with employers to bring together advice that is easy to find and use; improving access to work by increasing the capacity of the mental health support service; trialling personal budgets; creating an expectation that equipment will move with individuals when they move jobs—which is very important and we have to be practical about it; warm words are not enough—and increasing the reach and effectiveness of Disability Confident.
I take on board my noble friend’s reference to not making it law but encouraging everyone to understand and work with those with disability from an early age. That would make all the difference in the world.
Lord McKenzie of Luton (Lab)
My Lords, in introducing the Statement, the Minister promulgated the importance of work being good for people’s health and well-being. We agree with that—it is Waddell and Burton going back over a decade. The Minister referred to “good work” when she focused on this issue. Can she say how “good work” is characterised for these purposes, as opposed to the opposite, particularly in the context of limited and variable-hours contracts?
Baroness Buscombe
My Lords, good work is about supporting people to stay in work as well as supporting them to move into employment; making them feel comfortable in healthier workplaces, while offering the right support for staff to help keep them productive and engaged in work; utilising the broad spectrum of the health system to promote good health; and helping individuals to better manage their conditions. We genuinely believe that people who are in work need proper support; otherwise, their roles will not be sustainable. Too many people are not staying in work once they are in there. Our true definition of good work is where people feel able to cope, continue to feel able to cope and can progress within the workplace. Good work for individuals is not being seen as having been given a job—that is good enough. That is not good enough for us, and that is what we must focus on.
On the issue of employment contracts and so on, we want to ensure that people are able to work in a way that is sustainable. Many people working on zero-hours contracts, for example, find that they are better able to cope with their work/life balance and so on in that environment.
Baroness Manzoor (Con)
My Lords, I, too, welcome the Command Paper. As the Minister has already said, it is a really important initiative and it is a holistic approach to tackling a very important issue. People with disabilities have a right to be able to access employment and to be supported in work. Therefore, I welcome the £115 million that the Minister has announced today for new models of working. I also liked, by the way, the aim of halving the disability gap by 2020, so I am keen that we continue to keep that focus in mind. What I am concerned about is that perhaps some employers may choose the less severe end of disabilities in focusing their efforts, rather than looking at the whole range of disabilities across the full spectrum.
Baroness Buscombe
I thank my noble friend for her question. The reality is that is why we are very pleased with the recommendations of the Stevenson/Farmer review. My noble friend is absolutely right that we have to encourage employers, large and small, to understand that what might superficially appear to be a lesser disability—or a more severe disability—should not enter the decision in terms of taking somebody on board. The reality is that we need to do more to work with people in occupational health and to find different ways to encourage employers to support those with disabilities. Also, one of the things we are very keen on is working with the third sector and charities—for example, the Samaritans, which is particularly close to my heart—to act as a backstop and support to employers so that employers can feel more confident about taking people with disabilities on board.
Baroness Donaghy (Lab)
My Lords, I support everything that my noble friend Lady Sherlock said. She mentioned that the Government have not done a cumulative impact assessment on the social security cuts, but the Equality and Human Rights Commission has. It says that, since 2010, households with a disabled adult and disabled child have lost over £5,500 pounds per year on average. How does the Government’s new strategy address these losses?
Baroness Buscombe
My Lords, I have to say that we do not recognise the findings of the EHRC, because the analysis does not provide a full picture; it looks only at a particular subset of disabled people and does not include analysis on changes beyond tax and welfare. It will, therefore, present a skewed picture.
Lord Beecham (Lab)
My Lords, can the noble Baroness indicate the extent to which the interesting proposals in the Statement would apply to people who are not technically employed—that is to say the people in the so-called gig economy?
Baroness Buscombe
My Lords, I think it is right to say that in the first instance, or at the moment, our focus is about getting as many people as possible into employment. The issue with the gig economy is that we then cannot ensure that all the support systems that need to be provided will be there, but that is certainly something I am sure will be at the forefront of the minds of those who are taking the Stevenson/Farmer review forward—and also working with the Matthew Taylor review—in terms of finding every way to ensure that whoever is doing whatever form of work in the United Kingdom is properly supported.
Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017
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Baroness Buscombe
That the Grand Committee do consider the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment No. 2) Regulations 2017.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, these regulations were laid before the House on 10 July 2017. They will reduce confusion for pension scheme members and burdens for industry. They enact the conclusions of a call for evidence in 2015 concerning how a scheme determines whether or not a member is required to take financial advice prior to transferring their pension savings. Plainly put, the regulations simplify how trustees and scheme managers value members’ pensions in order to determine whether the requirement to take advice applies. There is no change in the actual value of the pensions themselves.
To better understand the provisions, it is helpful to first detail the wider context in which they operate. The provisions form part of a wider package of changes that as a whole simplify, but also expand, the protections available for members with potentially valuable guarantees attached to their pensions. Since they were introduced in April 2015, the pension freedoms have given individuals aged 55 and over greater choice in how and when they access their pension savings. Members who save into pension arrangements that provide potentially valuable guarantees can generally also exercise these new freedoms, where necessary by first transferring to a defined contribution scheme or converting to defined contribution savings.
The regulations debated here apply to these pension arrangements—“safeguarded benefits”, as they are known—which include typical defined benefit schemes, but more importantly for the purpose of this debate, safeguarded flexible benefits. I should explain these terms. Safeguarded flexible benefits are flexible in that there is a pot, which is cash-based, meaning that the pension freedoms apply, but they are also safeguarded because they include a promise in relation to the secure income they may provide in retirement. Normally, but not exclusively, safeguarded flexible benefits are personal pension contracts that include the option to take an annuity at a guaranteed rate. These are commonly referred to as a guaranteed annuity rate—GAR.
Because of the valuable guarantees offered by safeguarded benefits, legislation introduced an advice requirement alongside the pension freedoms. This requires trustees and scheme managers to check that members with safeguarded benefits valued as greater than £30,000 have taken financial advice before transferring or otherwise flexibly accessing those benefits. It is this legislative requirement—specifically, how pensions are valued for the purpose of determining whether or not it applies —that I am proposing to amend today.
The Government have become aware that the methodology prescribed in regulations for valuing members’ benefits against the £30,000 threshold has resulted in firms offering GARs having to provide two values for the member’s pension: the transfer value, which an individual will actually receive, and the actuarially calculated, but ultimately notional, value against which the £30,000 advice threshold is tested. Providers and consumer groups reported members with safeguarded flexible benefits experiencing confusion over why they were receiving two valuations. This means that there is always a potential risk that members may choose to take advice and access their pension, having wrongly believed that they would be entitled to the higher actuarially calculated value, when they would receive only the lower transfer value. The regulations debated here will, if approved, amend existing provisions so that trustees and scheme managers are required to treat the value of safeguarded benefits as equal to the transfer value of those benefits when determining whether or not the £30,000 threshold is met.
Trustees of typical defined benefit schemes will continue to use the same methodology, subject to limited exceptions to which I will come later. Meanwhile, those offering safeguarded flexible benefits, such as guaranteed annuity rates, produce only one valuation: the transfer value of the member’s benefits. For most schemes, this will be the cash value of the member’s pot. This single figure is easily explained and avoids confusion for members. It is also widely used within other communications and is already produced by firms. The instrument also contains transitional provisions to accommodate the changeover from one valuation methodology to another so that members are not disadvantaged.
Finally, the regulations make an amendment to the valuation methodology that removes an inconsistency in the treatment of defined benefit pension scheme savers. Specifically, it is for members of those defined benefit schemes which use higher cash equivalents than those required by legislation. We are working with actuaries to understand and manage the impacts of this measure, in order to understand and monitor its effects. We will be able to amend this requirement should it not function as intended.
Although the purpose and focus of this debate is, of course, the affirmative instrument to which I have just referred, it is worth explaining that the measures set out in these regulations form part of a package of regulatory changes. The Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment) Regulations 2017 introduce a new requirement for trustees and scheme managers to send tailored communications informing all members with safeguarded flexible benefits of the availability of potentially valuable guarantees at precisely the point they are most engaged—that is, when they are considering whether to flexibly access and, therefore, potentially surrender those benefits. Although not within the scope of today’s debate, because they have already been made and laid by the negative procedure, on 6 July 2017, these requirements form an important partner to the regulations debated here by improving member protection through targeted and simplified communications.
I will explain the combined effect of these measures on members with a range of values of safeguarded flexible benefits such as GARs. First, there are those members who have pension pots with a transfer value of over £30,000, for whom the advice requirement still applies, only now they will also receive an indication of the guarantee’s value before they commit to incurring the expense of seeking and taking financial advice. Members who decide not to proceed with their original request to transfer, convert or take a lump sum payment will have therefore saved themselves, on average, £900. For those who still wish to proceed and access their savings, that option is of course still available. Members will receive a more detailed analysis of the implications of doing this, as they will have to pay for financial advice.
Secondly, there is a group of members who were previously required to look for financial advice but, under the new valuation methodology, would now not be required to attempt to find advice. These are typically members with pots in the range of £15,000 to £30,000. I have used the terms “look for” and “attempt to find” advisedly, because I contend that these members are better served by a combination of the new valuation method and risk warnings this package of regulations introduces. Under the current regime, many of these members are both deprived of any opportunity to appreciate their benefits and denied the ability to exercise an informed choice, because they cannot find a willing financial adviser to perform a transfer analysis for a pension pot with a transfer value of £15,000.
Replacing the requirement for members to take financial advice with a personalised risk warning therefore maintains protection while simplifying the process. It does this by removing an additional layer of cost for members, confusion about the money they stand to access from their pension savings through the use of two valuations, and consequent frustration. The combined package of regulations ensures that even members with small pots—typically below £15,000—are notified of the presence of potentially valuable guarantees in their pension scheme. These members would not have been required to take financial advice under the current regime, but they will now be sent a personalised risk warning before they transfer, convert or otherwise flexibly access their pension pot.
In conclusion, the Government are committed to the principle that those pension savers wishing to exercise choice over when and how they access their pension savings should be able and supported to do so. However, it is equally important to protect members through simplifying how they are told about their pension, while at the same time avoiding unnecessary burdens by removing needless complexity for members and industry alike.
These regulations form part of a package of changes which ensure both that more members receive timely and suitable information about their safeguarded flexible pension benefits and that industry can use a simpler method for valuing benefits for the purpose of the advice requirement. Taken together, these changes demonstrate that the Government have listened carefully to both stakeholders and consumer groups. They show that we are now meeting our commitment, made as part of our consultation exercises, not only to monitor the pension freedoms but to reform existing measures where needed. I therefore commend these regulations to the Committee.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for the introduction and explanation of the regulations. As ever, I am delighted to have the expertise of my noble friend Lady Drake alongside me on these occasions.
The regulations derive, as we have heard, from Section 48 of Pension Schemes Act 2015 and are an integral part of the pension freedoms introduced with effect from April 2015. They focus on the requirements on trustees or managers of a pension scheme in Great Britain to ensure that appropriate independent advice has been received before safeguarded benefits can be converted, one way or another, to flexible benefits.
These regulations, as we have heard, sit alongside other regulations, of the negative variety, which concern requirements for schemes to provide risk warnings where members have the benefit of a GAR—guaranteed annuity rate—which they might otherwise be in danger of relinquishing. Together with the transitional provisions for the advice requirements, these are described in the Explanatory Memorandum as a package and we comment on them on that basis.
The requirement to get regulated advice currently operates when an individual’s safeguarded benefits are valued at more than £30,000. It is suggested that the detail of this requires amendment because the basis of calculation is unduly complicated in some circumstances and can lead to situations where the calculation of the advice threshold exceeds £30,000 but the pension pot size is different. Having two different valuations is said to be confusing, and we understand that point.
The impact assessment explains that these complications exist because the valuation regulations currently applied were previously used only by occupational DB schemes and that the circumstances in which they now have to be applied do not generally have standardised processes in place to value GAR benefits in terms of the current value of the future income they offer. As we have heard, the solution offered by these regulations is to adopt the transfer value of the pot in the calculations determining whether the £30,000 threshold for getting regulated advice is reached.
On an ongoing basis, this will save individuals with safeguarded flexible benefits some £11 million per year in advice fees. As we have heard, it will remove some 12,000 people per year from the need to get advice before they access pension pots, although they will be brought within the risk warning arrangements. This seems to be taking matters in the wrong direction. Changing the basis of calculation might be administratively or arithmetically convenient, but what assessment have the Government undertaken of the appropriateness of removing so many people from the benefit of advice?
It is accepted that individuals will no longer have to meet the cost of advice, but they will not be getting the benefit of that advice either. Of course, fewer requirements for regulated advice means fewer fees paid by individuals, but will the Minister remind us about the circumstances in which individuals can access their pension pot to pay for advice, the limits and the tax treatment? Do the Government have any information about the extent to which this is used?
The Explanatory Memorandum makes reference to the potential for inconsistent treatment of members regarding when advice is required when schemes can exercise more generous transfers. Will the Minister tell us how this issue is to be dealt with? We support the concept of risk warnings and the principle of informing members of their safeguarded flexible benefits. This should be the responsibility of ceding schemes and should happen before proceeding to transfer, convert or flexibly access scheme benefits. It should apply to survivors with safeguarded benefits.
We agree that those already required to take advice should be included in the risk warnings. We support there being no de minimis exemption on the basis of pot size. On timing, which my noble friend raised, it is proposed that the risk warning should be sent at least 14 days before any live request completes. Why can the warning not be sent, as my noble friend asked, as soon as a member request to transfer or access the flexible benefits is received?
The Government’s response to the consultation on these matters has confirmed the approach to the content of the risk warning and the inclusion of two comparable pension illustrations tailored to the member’s age, pot size and contribution rate and with details of guarantees available.
Paragraph 44 states that the Government are not convinced of the need to explain the difference between personalised tax warnings and the statutory money purchase illustrations. Will the Minister expand on the rationale for this position?
Can the Minister also confirm that she is confident that there should be no confusion arising from obligations in respect of retirement wake-up packs and personalised risk warnings? The written element of the risk warning is, according to the impact assessment, to include the signposting to free and impartial guidance—Pension Wise currently or SFGB, or whatever it is going to be called, in due course. As my noble friend has said, this is about the weakest indication of support, bearing in mind that many would previously have had to take advice. As my noble friend proposes, is this not the type of situation now potentially covered by amendments to the Financial Guidance and Claims Bill where individuals can be defaulted to the guidance service with an obligation to demonstrate that they have received guidance before proceeding?
We will not oppose these regulations, although in some respects we consider them a missed opportunity. However, they illustrate the complexity of aspects of our pensions system and the importance of ensuring that individuals are fully supported to understand the value of their pension entitlements.
Baroness Buscombe
I thank all noble Lords and the noble Baroness, Lady Drake, for taking part in the debate. I will do my level best to respond to the questions as fully as I am able. The noble Lord, Lord Jones, first asked about the legal term “survivor”. “Survivor” in the regulations means a person who has survived the member and has a right to future benefits or is entitled to benefits under the scheme in respect of that member. The noble Baroness, Lady Drake, and the noble Lord, Lord Jones, referred to survivors. I want to make clear that these regulations apply to both members and survivors. Where an individual inherits a member’s subsisting rights in respect of safeguarded benefits and those benefits exceed the advice threshold of £30,000 the survivor is also required to take financial advice. Survivors who inherit a member’s safeguarded flexible benefits will also receive a personalised risk warning should they decide to transfer, convert or flexibly access their inherited pension rights. The risk warning is sent to whoever is making a decision about their pension saving at the point they are most engaged in that decision.
In response to the question from the noble Baroness, Lady Drake, about what is included in the definition of safeguarded flexible benefits, the simplest description of a safeguarded flexible benefit is a cash pot with some form of promise or guarantee that the member can convert their pot into a pension income at a predetermined rate. We have framed the definition in fairly general terms, rather than specifically to the types of pension arrangements it covers, such as guaranteed annuity rates, in order to limit the scope for omissions or avoidance. Those uncertain whether the regulations apply should seek appropriate legal expertise and advice.
I turn to the question of what GARs in occupational schemes are not money purchase. GARs that are included in the rules of the pension scheme irrespective of whether this was reflected in the terms of a contract between the trustee and a third party, such as an insurer, are not money purchase. In this situation, the scheme would be liable to fund benefits over and above what the scheme assets—including the contract—can provide. So the benefits are technically non-money purchase and are, therefore, safeguarded benefits.
The noble Baroness also asked about members who are told about their guarantees too late. The question was, why not require schemes to tell members about their guarantees earlier on? The regulations laid alongside these regulations will require trustees and scheme managers to send members information about their valuable guarantees at precisely the point that the member is most engaged in considering what to do with their pension savings. This, we believe, makes them more effective at increasing awareness of guarantees among members than forcing schemes to send regular information long before members’ retirement, when they may not be actively considering a decision.
Lord McKenzie of Luton
Just on that point, is it the Government’s position that they would support those amendments as currently carried and included in the Bill?
Baroness Buscombe
I thank the noble Lord for the question. Yes, the Government will accept the amendment in the other place but of course we cannot speak for other Members in the other place, who may think differently. Certainly, the expectation is that the amendment will see Royal Assent.
There was a suggestion that our legislation is reducing protection for members of defined benefit schemes, but these regulations have no impact on the vast majority of such schemes or their members. They will still be subject to the same requirement for regulated financial advice where their benefits exceed the same threshold, and the same valuations will continue to apply. In the small proportion of schemes that choose to offer more generous transfer values than are required by law, members whose defined benefit pensions are worth in the region of £20,000 to £30,000 are being treated more fairly. They will not be forced to take advice when members with the same rights in other defined benefit schemes are not. These members can of course opt to take advice and will be able to seek guidance, which can signal the option of advice before transferring.
There was a question about whether we were reducing member protection and making it easier for savers to surrender their guarantees. We remain committed to the principle of the advice safeguard. That is why the threshold to whom it is applied remains the same—those with safeguarded benefits with a value of over £30,000—and with the introduction of these regulations, for the majority of members with safeguarded benefits there will be no change in how their pension is valued and calculated for the purpose of the advice requirement.
However, where a pot is cash-based but has a safeguarded element, such as the option of a guaranteed annuity rate, these regulations deliver simplification and clarity. Trustees and scheme managers now have to produce only one valuation of the member’s pot. A single figure is easily explained and avoids confusing members because it makes it clearer what the members may receive if they proceed to transfer, convert or otherwise flexibly access their savings. At the same time, parallel regulations introduce new protections that are timely—sent at the point members are making a decision—and increase the total number of members informed that their pots contain guarantees.
The noble Lord, Lord McKenzie, asked about the work that has been done on assessing the impact of the regulations. The Department for Work and Pensions estimates that there will be approximately 12,400 individuals per year who no longer need to try to find advice. The noble Lord said that he felt that these regulations were a missed opportunity. I reconfirm, as I said at the outset of this brief debate, that it is very important to take on board the fact that the Department for Work and Pensions is continually reviewing and assessing the impact of regulations, following the protection freedoms. If it is found that more needs to be done, changed or amended, we will certainly do that through secondary legislation.
The regulations debated here today simplify how trustees and scheme managers value members’ pensions when determining whether the requirement to take advice applies. Pension schemes with members who hold safeguarded flexible benefits—mainly but not exclusively personal pension contracts that include the option of an annuity at a guaranteed rate—can use the transfer value of the member’s pot, instead of undertaking a complex actuarial calculation.
Representatives of consumers and industry have both sought and supported the simplification of the current valuation method that these regulations deliver, and both groups will benefit from its implementation. Consumers with safeguarded flexible benefits will be less confused when they inquire about transferring or accessing their pot because they will receive only one valuation, and the difficulties for industry when valuing these guarantees will be removed.
Finally, these regulations form part of a package of measures. If approved, they will come into force alongside a new requirement to send all members tailored communications, ensuring that all members are told about their valuable benefits in a more timely and accessible manner. There will also no longer be a cohort of individuals who are required to seek financial advice, but are often unable to locate an adviser willing to advise on their pension savings. I hope I have set out for the Committee the need for these regulations and have responded to the matters raised. I commend these draft regulations to the Committee.
Universal Credit
Baroness Buscombe Excerpts(6 years, 7 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, by leave of the House, I shall repeat a Statement made by my right honourable friend the Secretary of State for Work and Pensions in the House of Commons regarding universal credit.
“With permission, Mr Speaker, following the announcement made by the Chancellor in his Budget speech yesterday, I would like to make a Statement on universal credit.
Universal credit is the biggest modernisation of the welfare system in a generation. It supports those who can work and cares for those who cannot. Under universal credit, people are moving into work faster and staying in work longer than under the previous system. Once fully rolled out, universal credit will boost employment by around 250,000—equivalent to around 400 extra jobs for every constituency. Universal credit was introduced to replace the complex and failed benefit system of the previous Government, which created cliff edges discouraging people from working more than 16 hours a week and trapping 1.5 million people on out-of-work benefits for nearly a decade. Colleagues from across the House have all voiced their support for the principles underpinning universal credit. It is a modern welfare system which, through one simple monthly payment, ensures that work always pays, mirrors the world of work and supports people to earn their way out of financial insecurity and welfare dependency.
As we introduce universal credit, we are constantly improving how the system works. We recently introduced changes to ensure that everyone who needs them has access to advance payments and we are making our telephone lines freephone numbers. I have consistently made clear that we would continue to introduce universal credit gradually. Of the total number of households that will eventually move on to universal credit, 9% are currently receiving it, and this will increase to 12% by February. This enables us to make improvements over time.
Colleagues have had concerns about the waiting time for the first payment. I am grateful to my parliamentary colleagues for their constructive engagement on this issue. There have been several debates here and in the other place. This Statement responds to these and fulfils the commitment made on behalf of the Government in relation to the resolution of the House on 18 October 2017. We are now offering a balanced package of improvements that puts more money into claimants’ hands earlier, ensuring extra support for those who most need it. Next month, new guidance will be issued to staff to ensure that claimants in the private rented sector who have their housing benefit paid directly to landlords are offered this option when they join universal credit.
In January, we are making two changes to advances. First, the period of time over which an advance is recovered will increase from six months to 12, making it easier for claimants to manage their finances. This will apply regardless of the level of advance claimed. Secondly, we are increasing the amount of support that a claimant can receive from up to 50% of their estimated entitlement to up to 100%, interest-free. In practice, this means that new claimants in December can already receive an advance of up to 50% of their overall entitlement, and may receive a second advance to take it up to 100% in the new year. Taken with the first payment, this means that claimants in need could receive nearly double the money they would usually get. In addition, from spring next year, we will be making it possible to apply for an advance online, further increasing accessibility for those who need it.
From February we are removing the seven-day waiting period, reducing the length of time claimants might wait to receive their first full payment. From April, for new claimants already receiving support towards their housing costs we are providing an additional payment of two weeks of their housing benefit to support them as they transition on to universal credit, helping to address the issue of rent arrears for those who most need it. This is a well-targeted measure that will support 2.3 million people, including the most vulnerable, with an unrecoverable, automatic payment worth an average of £233 each. This is a one-off investment of £550 million to ensure that universal credit supports those who need it. In April, as a short-term measure, we will change how claimants in temporary accommodation receive support for their housing costs to ensure that local authorities can recover more of their costs and can therefore continue to offer this valuable support to those who need it most. We will also consider longer-term solutions to this issue.
The majority of claimants are comfortable managing their finances. However, personal budgeting support and digital skills training is provided to claimants through universal support, delivered through local authorities. Building on this, we are exploring with Citizen’s Advice the scope for greater collaborative working to help claimants locally as they move to universal credit.
We must remember that universal credit is aimed at supporting those out of work to move into work and, once they are in work, to progress and increase their earnings. That is why, in addition to these measures, the Government have allocated £8 million over four years to conduct a number of tests and trials to support development of the evidence about what works to help people to progress in work. This is a comprehensive and wide-ranging package worth £1.5 billion, offering significantly more support than a simple reduction of the wait for the first payment to one month. To deliver the package, we have carefully revised the UC rollout plan to ensure that we continue to safely and gradually roll out this important welfare reform. I will place the updated rollout plan in the House of Commons Library. This does not change the final point at which the rollout of universal credit will be completed.
To help to ensure a smooth transition to full service, we have also decided to close new claims to our prototype universal credit live service. This will not affect any existing claims. In addition, currently any new UC claim from a family with three or more children will be routed back to tax credits until November 2018. With the extension to the rollout plan, that will now shift to the end of January 2019.
This is a comprehensive package that responds to concerns raised inside and outside the House. We have a clear objective: to ensure that as many people as possible get the opportunity to work and to maximise their potential to better their circumstances. We will continue to roll out universal credit in a steady and considered manner and, in doing so, deliver a welfare reform that will positively transform lives. I commend this Statement to the House”.
Lord Kirkwood of Kirkhope (LD)
My Lords, I am happy to follow the noble Baroness, Lady Sherlock, and I agree that the statement that we had in the Budget deals only with the journey on to—the gateway into—universal credit. I welcome the Statement. To be realistic, if the Government had not said something, it would have been impossible to resist the pressure to delay the further rollout of universal credit, and I do not agree that that would be sensible—I never have.
I have two questions for the Minister. For the reasons that the noble Baroness, Lady Sherlock, set out at length, the delivery of these changes will be difficult. Can she assure us that they will land, be locked in and operate to the benefit of claimants in future, without fear of further disruption, letdown and distress? It is a very tall order. Some of these changes start next month. Given the background to the operational implementation of universal credit, it is not unreasonable to be suspicious about the implementation of the immediate changes that have been announced, welcome as they are. Can the Minister assure us that she personally will ensure that they all work and will make claimants’ lives easier, and that she will report to the House regularly on the success or otherwise of the rollout?
But these are only gateway measures; they are only easing the transition to universal credit. The noble Baroness, Lady Sherlock, is quite right: the rising costs and fixed benefits that low-income households are facing will condemn some of these families to a very bleak future. That necessitates my second question: will the Government start planning to use some of the £3 billion annual savings within UC alone—never mind the other ongoing cuts and freezes—to ease people’s road into work by increasing work allowances and tapers? If we do not do something of that kind, it will be very difficult successfully to promote the programme of progression through work into sustainable longer-term jobs and careers.
Once the difficulties of getting people on to universal credit are overcome, and people are in a steady state of receiving their universal credit payments monthly, the next big political battle will be trying to get the Government to be more realistic about the money available to support people when they are on universal credit.
Baroness Buscombe
My Lords, I will do my best to reply to the multitude of questions. I will begin by saying that they seem to be in contrast with the response made in another place by, for example, the right honourable member for Birkenhead, who was very congratulatory about what we have achieved in this package.
Let me be clear: today’s package is worth £1.5 billion over the scorecard period, and will ensure that claimants get money, and get it sooner. We should remember that we are already spending more than £95 billion on benefits for people of working age. So all that I am hearing about cuts and how terrible it all is—all it is doing is frightening people. That has to stop.
Baroness Buscombe
No, I am sorry—it is frightening people. The leader of the Opposition in another place said that 200-plus people in one area of the country—one in eight—had been evicted from their houses, but in fact it turned out to be only eight, and one of them had left his house 18 months earlier.
We have to stick with the facts. Our measure on advances means that where there is underlying entitlement, a household can have access to a month’s support within five days. I have seen it in operation in a jobcentre, where somebody who was very much in need was able to have it in a matter of hours. Housing benefit transition payment measures support housing benefit claimants’ transition on to universal credit by an average of £233. Yes, that £233 average will be two weeks’ rent, which is unrecoverable and automatic. It will be equivalent to what that person is paying in rent, and does not have to be paid back.
From January, claimants who started their UC claim in December and had up to 50% of their payment advanced will be able to claim an additional advance to bring their total advance payment up to 100% of their estimated monthly entitlement. Their repayment period may also move from six to 12 months accordingly. They do not have to take that. They may want help only with the first few months; it is up to the claimant to decide. The noble Baroness talked about going into her bank. Her bank will charge her interest. This is interest free—that must be made extremely clear.
Waiting days will be abolished from February. When we had our debate last week, the focus appeared to be on the whole operation of moving on to universal credit. In this Budget, we have dealt fairly and squarely with this issue by the measures that we are bringing forward. Waiting days will be abolished. However, the most vulnerable are already exempt from those waiting days, including care leavers, victims of domestic violence and those with serious illnesses. I also say to the noble Baroness that waiting days are not something that the Conservative Party or this Government introduced. They have existed for many years, with the exception of two years about three years ago.
We will continue to roll out our universal credit to ensure that the real improvements that it is delivering are extended to more people. Reprofiling our plans enables us to deliver significant improvements while continuing rollout.
Reference was made to debt. We are making sure that the claimant is able to access all the money they need to manage until their first payment by increasing the maximum amount of advance available. Extending the period of repayment to 12 months will enable claimants to be able to repay the advance without incurring higher monthly repayments. However, of course, in addition we already have budgeting loans—which, again, are interest free and which we have had for some considerable time to help claimants who are in need.
I would like to make a response on the housing benefit transitional payment. We can confirm that natural migration and managed migration claimants with housing benefit will get the transitional payment. We will have a short-term solution through local authorities initially before incorporating this payment into the automated system from DWP. But we do not want to wait for that—we want to get on and introduce this very substantial support.
Everyone who needs an advance can get an advance—and get one quickly. Almost 70% of people are paid monthly or four-weekly, which is why we have a monthly payment. We want to reflect the world of work in that sense, which is why we are moving people on to monthly payments in arrears.
In response to the noble Lord, Lord Kirkwood, yes, there is no question about this—not just myself but the whole team at the Department for Work and Pensions, the team running universal credit and the ministerial team are looking at this constantly. And we are not only looking at it but talking constantly to people actually on the ground, which is the most important thing. We are actually communicating twice a month. Every jobcentre is looking at how it is working and relaying its thoughts, concerns and ideas for improvement through to the Department for Work and Pensions. That is very important. That is why also we are rolling this out slowly and gradually—because we want to make sure that we get the system to be as good as possible. Noble Lords should remember that, when it is fully rolled out, about 7 million people will be on universal credit, including families, which means that we have to get the system right. This is not easy. I commend and praise those who work within the Department for Work and Pension team who are thinking through all these issues on a daily basis.
I fear, listening to members of the party opposite, that they seem to prefer the legacy system that has trapped people on benefits. By the way, if someone went on to the legacy system in the middle of December, they would get nothing before Christmas. And if we were to pause, we would have chaos—which would make people’s lives so much worse. With universal credit, people are entitled now to an immediate advance and immediate help for that which they need through the Christmas period into the new year—and then they can get another 50% advance on that first month’s payment, if they so wish.
We have been thinking this through and want to do everything that we can to support people in need. We are working to transform lives. Universal credit is a much better system than the legacy benefits that have been so discredited. With this package of measures, it will become even better in the months to come.
Lord Elton (Con)
My Lords, it is the function of Oppositions to pour cold water on the efforts of the Government, even when there are elements to please them. I think that my noble friend the Minister will agree that the noble Baroness, Lady Sherlock, made a very responsible response in an extraordinary context in which there are attacks on this policy, inside and outside Parliament, that are entirely unjustified. I wonder whether my noble friend heard on Saturday, on the “Today” programme, the assertion, widely repeated thereafter in the media, that on Christmas day 100,000 people would lose their universal credit. Can she put that straight? Since I am allowed on my feet only once, can she also tell us what is being done to steer people taking on advance payments in the direction of debt management counselling? I take the point about the dangers of increasing debt.
Baroness Buscombe
My Lords, I thank my noble friend for his support. He is quite right about the noble Baroness opposite, who, of course, knows so much about this system and the whole system of social security—and I pay tribute to her for that. But the reality is, I genuinely feel, that these attacks are unjustified, as my noble friend said. Indeed, I think that he referred to the “Money Box” programme with Paul Lewis, which stated that 100,000 people would not receive something over Christmas. That is so wrong. We are looking to “Money Box” at the moment to correct that and apologise. I have always put a lot of trust in that programme, but now I say loudly and clearly to Paul Lewis that the jury is out. I look forward to him responding in a far more positive way, because it is simply not true and is continually adding to the scaremongering.
We are hearing about people who are afraid to go on universal credit now, and that is appalling. We need to get behind the system, and we are doing everything that we can to make it work. We are trying to transform people’s lives and get them out of that system of being trapped in appalling welfare dependency, with no confidence and isolation in their lives. We want to transform their lives and we are doing everything that we can to do that.
Lord Cashman (Lab)
My Lords, I thank the Minister for repeating the Statement. After our last exchanges I dropped her a note because I think that I was rather unfair on her in my intervention. Would she accept with all sincerity that we welcome the changes? As I said in my contribution in our debate, I urge the Government to go further—because the negative cases that you see us representing are not imagined. As I said, again in my contribution, they have been brought to our attention by NGOs such as Scope, Shelter, Crisis, St Mungo’s, the Residential Landlords Association and London Councils. While it is wonderful that she visited the London Bridge centre, I encourage her to visit others. Does she agree with me that we are truly representing those cases that are brought to our attention—which, as I said in my contribution, were brought to me by the MP Jim Fitzpatrick?
Baroness Buscombe
I very much welcome the letter from the noble Lord, Lord Cashman, although, unfortunately, it has not arrived. However, I look forward to reading it when it does. I am very grateful to him. I was not feeling terribly well last week, and probably looked pained because I was worrying more about responding to an important debate than about what the noble Lord had to say—although I took very much on board what he was saying.
This is serious, of course, and we want to be clear that every single case that any noble Lord may hear about they should please send in to us. We will do our best to try to sort it, because we want the system to work. We are looking at a number of things; this is not the end of the road for our thinking through the system, as I have already said. For example, as my right honourable friend the Secretary of State in the other place made clear earlier today, we are looking at the taper rate. I know that is something that has exercised noble Lords. The Government are committed to ensuring that universal credit supports people into work but, as the Chancellor set out in his Budget, the taper rate will be kept under review and the Government will continue to consider the case for further changes. That is one example. In every other way, where we can, we will certainly look at how we can improve.
The noble Lord made reference to St Mungo’s, from which we had a response saying:
“We have been calling for a new strategy to tackle homelessness. I welcome the opportunity to work with the taskforce to end the national scandal of rough sleeping altogether. We are also pleased to see a number of changes to Universal Credit that St Mungo’s had been calling for, particularly the removal of the 7 day waiting period and extension of the repayment period for advances to 12 months”.
We have had terrific support, including from Citizens Advice, with which we are working very closely.
The Lord Bishop of Coventry
My Lords, I share with the Minister and the House a bit of local information. We find ourselves in an interesting situation in Coventry, with rising employment and yet a 30% increase in usage among those in the city—mostly single males—among whom universal credit has been rolled out. Like others, I very much welcome the changes and I am sure they will help enormously but, at the same time, I still have reservations about whether they have gone far enough and address other issues that some of us on the ground have identified.
I was glad to hear in the Statement the reference to universal support, although there were not many details about its rollout. I was also glad to hear about the partnership with CAB and other bodies; I am conscious, though, of the long queues each morning outside the citizens advice bureau in Coventry. Can the Minister say what sort of funding will be provided for universal support? In particular, on the issue of debt, which is important, will dedicated funding be made available for impartial debt advice for those who are running into difficulties?
Baroness Buscombe
I thank the right reverend Prelate for his intervention. While we are very proud of the fact that we are getting more people into work, one issue that we really must tackle and which we have been thinking about—hence our response—is the need now to focus our efforts on in-work progression. That is why the Government have allocated additional funding of more than £8 million over four years to run a suite of tests and trials inside and outside government to support the development of evidence about what works to help people progress in work—we have already had ministerial meetings to discuss this—including those who are insecure at work and women returning to the labour market. The Social Security Advisory Committee at the Department for Work and Pensions—which is entirely independent of us—has just published a report on this which is extremely helpful in terms of our thinking. We need to complement record-high employment and record-low inactivity with a labour market that increases living standards, with economic security for everyone across the country. That is why the right reverend Prelate is completely right; we have to focus on that.
With regard to debt, when someone goes on to universal credit, they will have a work coach, with personalised support and assistance. There are noble Lords across the House who have been very involved, as I have, with the passage of the single financial guidance body Bill which, at its heart, is all about financial capability. This is extremely important in complementing our work and progression of universal credit. It is about education from an early age, helping people to manage, signposting people who are in difficulty to really good support. At the moment, support comes from three different bodies, but one purpose of the Bill is to bring them into one single financial guidance body that everyone can have access to for free advice, debt support, guidance and further signposting of what might help them. I am rather proud that we have seen that through your Lordships’ House. Through its passage—I am looking at the noble Lord, Lord Stevenson—we have also sought to clarify our commitment to introducing a debt respite scheme with breathing space, which I am confident will help thousands of people who are in debt and in difficulty. Again, this Government are very proud of that and we wish the passage of that Bill well in another place.
I know that I am taking up time but, briefly with regard to universal support, we have invested £200 million in universal support and all claimants can access help with managing their finances when they come on to UC through those different channels.
Baroness Thomas of Winchester (LD)
My Lords, why are people being sanctioned so unfairly, as reported in the debates last week in both Houses, or does the Minister think those reports are being exaggerated? Is it because the people did not let the Jobcentre Plus office know that they were, say, in hospital, or that a bus had broken down? Supposing they do not have a mobile phone—are all UC claimants given a phone number to ring if they are unavoidably stopped from getting to an appointment at the jobcentre?
Baroness Buscombe
My Lords, in response to the noble Baroness, I have to say that, on sanctions, we believe it is right that there is a system in place to reinforce conditionality and to support and encourage claimants to do everything they can to move into or towards work or to improve their earnings. Imposing a sanction is not something that we do lightly. Claimants are given every opportunity to explain why they failed to meet their agreed conditionality requirements before a decision is made.
Based on last year’s data, each month, on average, fewer than 1% of ESA claimants in the work-related activity group had a sanction in place and fewer than 4% of UC claimants had a sanction in place. We are still quality-assuring the data for JSA but, in August, the DWP published a new sanctions statistics release with a revised methodology showing how many people were undergoing a sanction. This development is part of DWP’s commitment to the PAC to improve its published statistics and to be absolutely clear about what we are doing. The important thing is that we do not impose sanctions lightly; there has to be a tangible issue at hand.
Baroness O’Cathain (Con)
My Lords, I wish some people had realised how much work my noble friend Lady Buscombe has done since we were last here debating this problem—and it was a problem. It is incredible to think that nobody has said, “Well done” to her and the Chancellor and that, instead of saying that we are touchingly loyal, saying that actually we have worked at it.
Baroness Buscombe
I am extremely grateful to my noble friend for her support for what we are doing and I very much appreciate that.
Lord Touhig (Lab)
My Lords, the Minister will remember the comments made last week by my noble friend Lord Low of Dalston and myself about the impact of universal credit on people with disabilities and autism. I am sure she will be familiar with it because I have also tabled some Questions. Can we live in hope that there will now be something positive to benefit people with disabilities and autism, because we certainly have not heard anything in the Statement today?
Baroness Buscombe
My Lords, I want to make sure that I say the right thing. All I can say is that we are spending over £50 billion on disability, which is a record, and expenditure is going up. We spend over £50 billion a year on benefits to support disabled people and we are proud of that. Spending on people with health conditions is up by more than £7 billion since 2010. As a share of GDP, this is the second highest in the G7.
Almost 3.5 million disabled people are now in employment, which is really fantastic. We want to help as many disabled people as possible into work. They want to work and to be part of the world that they inhabit—that has to be our ultimate goal. But the noble Lord is right: we closed our debate last week with the noble Baroness, Lady Sherlock, saying that this is a work in progress. I entirely agree with her. It is a work in progress and it will continue to be until rollout in 2022.
Lord Cormack (Con)
My Lords, I am sure that we are grateful to my noble friend and also glad that she is feeling rather better than she was last week as, clearly, she was labouring under difficulties. We are grateful, too, to the Chancellor for responding, but can my noble friend consider very carefully some of the points that came up last week? I quoted a parish priest, who happens to be a godson of mine, who had written about sanctions and the way they were being administered, to his certain knowledge, in a very deprived urban area of Lancashire. Can we please take very careful note of what people like that say as they have no personal axe to grind but are merely concerned about some of the most deprived people in our communities? Can we listen and try to be continually responsive? This is a good beginning but we still have far to go.
Baroness Buscombe
My Lords, I thank my noble friend. In our debate last week, I remember that he referenced another contact, who said that our work coaches had targets. That is entirely wrong. Let me be clear: we have sanctions. A Work and Pensions Select Committee report in 2015 stated that sanctions are,
“a key element of the mutual obligation that underpins the effectiveness and fairness of the social security system”.
Evidence shows that sanctions have a positive impact on behaviour. This has to be seen in the context of people whose families have for generations not had work in their lives. The Select Committee is right about this issue as over 70% of JSA claimants and over 60% of ESA recipients say that sanctions make it more likely that they will comply with reasonable and agreed requirements.
That is not to say that we ignore those desperately in need. We have a well-established system of hardship payments available as a safeguard if a claimant demonstrates they cannot meet their immediate and most essential needs, including accommodation, heating, food and hygiene, as a result of their sanction. A legislative change came into force on 23 October 2017 to extend the list of JSA vulnerable groups to include homeless people and those with mental health conditions so that they can, if they qualify, receive hardship payments from the first day a sanction is imposed.
Lord Cotter (LD)
My Lords, I wish to ask the Minister two questions. As regards online training for those in difficulty, what will be done to ensure that they are capable of gaining online access? Secondly, I may have missed this but when will the costly phone line be replaced with a free line? Has that happened already? If not, it is very urgent indeed.
Baroness Buscombe
On the second point, that is happening as we speak. It has not happened in every situation but it is happening very quickly. It was wrong for anyone ever to say that it was a premium payment; it was not. There was no question of the DWP making any profit out of it. However, we are very pleased to say that we are moving to a free phone line as quickly as possible, and I know the work coaches are supportive of that. It is literally happening now, as fast as we can get our telephone lines shifted in each area.
One of the huge advantages of having work coaches—again, I have seen this in action—is they can help somebody who is in difficulty and teach them how to access the system online. Indeed, a couple of hours ago, my right honourable friend the Secretary of State said in another place that one of his constituents was very proud that, having gone online to access UC, they will now order their groceries online. That may seem a small thing for us, but for that person it was a huge step forward in feeling they were becoming part of the world we all inhabit, which is constantly changing and developing and can be quite frightening for some. We want to give people confidence through the work coach system.
Financial Guidance and Claims Bill [HL]
Baroness Buscombe ExcerptsTuesday 21st November 2017
(6 years, 7 months ago)
Lords ChamberRead Full debate Financial Guidance and Claims Act 2018 View all Financial Guidance and Claims Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 70-I Marshalled list for Third Reading (PDF, 106KB) - (20 Nov 2017)
Baroness Buscombe
“Objectives
(1) The objectives of the single financial guidance body are—
(a) to improve the ability of members of the public to make informed financial decisions,
(b) to support the provision of information, guidance and advice in areas where it is lacking,
(c) to secure that information, guidance and advice is provided to members of the public in the clearest and most cost-effective way (including having regard to information provided by other organisations),
(d) to ensure that information, guidance and advice is available to those most in need of it (and to allocate its resources accordingly), bearing in mind in particular the needs of people in vulnerable circumstances, and
(e) to work closely with the devolved authorities as regards the provision of information, guidance and advice to members of the public in Scotland, Wales and Northern Ireland.
(2) The single financial guidance body must have regard to its objectives when it exercises its functions.
(3) In this section “information, guidance and advice” means—
(a) information and guidance on matters relating to occupational and personal pensions,
(b) information and advice on debt, and
(c) information and guidance designed to enhance people’s understanding and knowledge of financial matters and their ability to manage their own financial affairs.”
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, on Report I agreed to consider a range of matters concerning Clause 2, and I now make reference to government Amendments 1, 3 to 9, 12 to 13 and 32. During our debates on the Bill I think that we have all been in agreement that the provisions articulated in Clause 2 were important in setting the tone and ethos for how the single financial guidance body should operate. In the debates on Report, we discussed the need for these provisions to be well structured and clear. I believe that this group of amendments provides that clarity and structure. They tidy up the framework on which the body will progress towards achieving its objectives and assist it and all those with whom it will work closely in understanding our expectations in relation to its activities. I am extremely grateful for the enormous contribution that noble Lords have made to the Bill. Indeed, so significant has been that contribution that we have ended up with a rather long and unwieldy Clause 2, so for this reason we propose to split it into three separate clauses.
Government Amendments 1 and 6 remove the objectives from the end of Clause 2 and insert them as a separate clause immediately before the clause. This reordering picks up on the points made by the noble Lord, Lord Stevenson, that starting with functions and moving on to objectives was perhaps the wrong way around. I agree with him. Placing the body’s objectives upfront will emphasise and aid a wider public understanding of the overarching objectives of the body and how it carries out its functions. Government Amendment 8 divides the remaining provisions in Clause 2 into two. The first sets out the broad functions of the body and the second contains the specific cold- calling provisions pertaining to the broad consumer protection function. It does not change the content of the cold-calling provisions.
Setting out the detail of the body’s new consumer protection function in a separate clause is consistent with the approach we have taken in the Bill. For example, this is how we have, from the introduction of the Bill at Second Reading, treated the specific detail about pensions guidance, which is articulated in a separate clause after Clause 2. Alongside relocating the body’s objectives, this amendment simplifies what had become a very long and complex clause. The Government want the legislation for the single financial guidance body to be clear and to flow in a way that the people who will use it, including the body itself, are able to read and understand. On the whole, people will not have had the benefit of our debates in Parliament, at least not without considerable reference to Hansard. The easier the Bill is to read when coming to it for the first time, the better.
In addition, I have considered the case that was made well by the noble Baronesses, Lady Finlay, Lady Coussins and Lady Hollins, and the noble Lord, Lord McKenzie, about the need for clarity around access to financial guidance and awareness of financial services for people who find themselves in vulnerable circumstances. Again, I agree that we should be clear about the body supporting vulnerable people in exercising its functions. Government Amendment 1 therefore strengthens the body’s objective to ensure that its information, guidance and advice is available to those most in need of it, bearing in mind in particular the needs of people in vulnerable circumstances.
Moving on to government Amendment 3, as I indicated on Report, facilitating the bringing together of expertise to address the difficult and sometimes interrelated financial issues that people experience in terms of budgeting, savings, retirement planning and problem debt is a cornerstone of the policy for the single financial guidance body. We want to make it easier for people to access the help they need to make effective financial decisions. This amendment speaks to the concerns raised by the noble Lords, Lord McKenzie and Lord Stevenson, and places an obligation on the body and its delivery partners to consider all the financial guidance and debt advice needs of people accessing its services, and whether they would benefit from receiving other services that the body provides.
Government Amendments 4 and 5 make small changes to the strategic function of the body. They address points raised by several noble Lords during our debates in Committee about the lack of clarity around the body’s role in developing a national strategy to improve people’s financial capability and ability to manage debt. The strategic function currently requires the body to work with the financial services industry, the devolved authorities, and the public and voluntary sectors to support the development of a national strategy.
These amendments make it more evident that the single financial guidance body will lead on developing the strategy and that it will have some responsibility for overseeing the delivery of activities stemming from the strategy. I believe these amendments address the concerns about accountability that a number of noble Lords expressed.
Finally, Amendments 7, 9, 12, 13 and 32 are minor and technical in nature. Amendments 7, 12 and 13 are together a tidying-up measure. They remove the definition of devolved Administrations from Clauses 2 and 14 and insert the definition into Clause 19, “Interpretation of Part 1”. Amendment 9 corrects a technical defect in Clause 3(2), replacing the reference to the Pension Schemes Act 2015 with one to the relevant section of the Financial Services and Markets Act 2000. Amendment 32 allows for differential commencement by area. This is so that, in accordance with Cabinet Office guidelines, if it is necessary to commence at a later date for Northern Ireland there is a power to do so.
I trust and hope noble Lords will agree that these amendments provide sensible and pragmatic adjustments to the Bill, improving its structure and providing clarity. I beg to move.
Baroness Coussins (CB)
My Lords, I welcome Amendment 1 and remind noble Lords of my interest as president of the Money Advice Trust. The amendment, in clarifying the single financial guidance body’s objectives, will ensure that its services are available to those most in need of them, specifically with the inclusion of the words in proposed new subsection (1)(d), “bearing in mind”, the particular,
“needs of people in vulnerable circumstances”.
As noble Lords heard during our debate on this on Report, there has been a great deal of progress in this area in the financial services industry in recent years, including through the work of the Financial Services Vulnerability Taskforce. It is very good to see that the SFGB should give similar prominence to vulnerability in its work. The explicit inclusion of “vulnerable circumstances” in Amendment 1 is an excellent example of this approach.
I offer my sincere thanks to the Minister for listening so carefully to what I and my noble friends Lady Finlay and Lady Hollins said on this matter at an earlier stage, and for agreeing to reflect this in the Bill. I am very pleased to support Amendment 1.
The Earl of Listowel (CB)
I, too, thank the Minister and noble Lords for making significant progress. Perhaps I may ask for clarification: will care leavers be included in the “vulnerable” group? I apologise to your Lordships for being absent from Report—I was not able to be present—so I ask this question now.
Lord Stevenson of Balmacara (Lab)
My Lords, I declare an interest as a member of the Financial Inclusion Commission and a former chair of StepChange, the debt charity. Before I get on to the nature of the amendments, which we support, I want to pick up on the tone that has already established itself around the House of a group of people with expertise and knowledge, willing to put aside any political differences they might have at the start of such a Bill, and with a fierce commitment to work together to improve what we have before us. We have just heard a series of short comments which are redolent of a much greater and more important truth: namely, that when the House does this, it really does it well. I am very grateful to all concerned who have been part of this. We are seeing today a Bill that has been transformed, not because of any particular line or argument in a political or wider sense but because people genuinely believed that there were things here that could be made better and that, as a result, the lives of people right around this country would be improved. I think it is very important that we hold on to that.
I thank the Minister, as everyone else has, for introducing this group of amendments which reorganise and expand the objectives and functions of the new single financial guidance body and set the tone for its future activities. We are pleased to support the group of amendments, as I said. It is important to get a sense of the journey we have been on: we made it clear at Second Reading that, although we agreed with the Bill, we thought it was a framework Bill and not a Bill that had the substantial and important powers that we thought were needed. We wanted to make sure that by the time it left your Lordships’ House it had been changed a lot—and of course it has.
As originally drafted, it was too narrowly focused on the near-term task of bolting together the three separate functions that were being brought together—debt advice, pensions guidance and financial capability—and on transferring the very important responsibility for claims management to the FCA. It was really short—a lot of people picked this up—on the vision that the body should have and what the sector was going to be in the medium term. It seemed to devalue the work on strategy that was so important and is now at the centre of the activities. The fact, as the noble Baroness said, that the original Clause 2 led on functions and only later referred to objectives meant that the Bill, I think unintentionally, gave the impression that the main purpose was the enactment of what would be simply a series of structural adjustments.
This, as we have been reminded, was at a time when the Government had decided to change the terms of trade in financial inclusion by creating a new Minister at the DWP, the department that is sponsoring the Bill, but had not set out clearly what they expected the Minister to do. We all agreed, I think, right around the House, that the Bill and the new functions of the SFGB would actually be about delivering a holistic financial inclusion policy. As we have already learned from its chair, the excellent Lords Select Committee that reported at about this time on a range of issues around financial inclusion made the case for extending the Bill to cover a number of specific proposals.
Towards the end of Report, when it was clear that the Bill had changed and was going to contain much more about the application of financial inclusion policies, as we will hear again later today, we suggested that Clause 2 should be revamped. What we wanted was a bit more of the longer-term vision that the SFGB should be aiming for, and we argued that putting the objectives first and then dealing with the functions at the new body’s disposal was a better way of doing that—and I think that splitting the original clause into separate groups is a concrete way of doing it. So we are very grateful to the Minister for seeing the merit of our arguments and we thank the Bill team for working very hard to get the new draft into shape. I have a reputation in your Lordships’ House for not being very good at drafting, so I was delighted when they agreed to take it away and bring it back in the form in which we now have it: it is so much better.
The noble Baronesses who spoke on the vulnerability issue did the House a great service by raising with great passion the need to make sure that the Bill, as well as generally describing the new body, focuses on vulnerable people. We are very grateful to see that amendment here today. With that, we support these amendments.
Baroness Buscombe
My Lords, I thank noble Lords for this short debate and for their support for this amendment. In reply to the question raised by the noble Lord, Lord Kirkwood, yes, we expect persons in vulnerable circumstances to be robustly signposted to UC and other benefits where appropriate.
Baroness Buscombe
(b) advice to the Secretary of State on the establishment of a debt respite scheme (see section (Debt respite scheme: advice to the Secretary of State)).”
Baroness Buscombe
My Lords, I turn to the protection of indebted consumers, in particular the idea of providing a breathing space scheme, referred to in the amendment as a debt respite scheme. I thank noble Lords for their insightful and constructive contributions to previous debates on the subject.
I promised on Report that the Government would do further work on the issue in time for Third Reading. My officials and I have worked hard to produce an amendment that enables breathing space to be delivered quickly and effectively, a case for which noble Lords—in particular, the noble Lord, Lord Stevenson—put forward eloquent and powerful arguments. Indeed, the wording of the amendment builds on the amendment tabled by the noble Lord, to which the noble Lord, Lord Sharkey, and the noble Baroness, Lady Altmann, added their names on Report.
The best of your Lordships’ House has been on show in the development of the amendment. The way in which the Government and the Opposition have worked together to achieve consensus on a workable amendment which will enable the successful delivery of a breathing space scheme has been impressive, and it is my pleasure to introduce the amendment to your Lordships’ House. I know that there is broad agreement across your Lordships’ House that a breathing space scheme is both necessary and important. It has the potential to help thousands of vulnerable families out of problem debt, and provide a better life for individuals and their families.
I reassure the House that the Government remain strongly committed to the implementation of a breathing space scheme that is well designed and delivered at the earliest opportunity. We have already set out a clear timetable for developing the policy; the amendment provides the legislation that will allow us to implement it. Beyond enabling the introduction of a breathing space, the amendment contains many similarities with the one tabled by noble Lords on Report. For instance, it provides for details of the scheme to be set out once more detailed policy design has taken place. This is crucial, given that the Government are committed to listening to expert views put forward in the call for evidence. It also requires the Government to receive advice on the design of the scheme from the single financial guidance body, which will be important given the body’s expertise and central role in supporting indebted consumers. However, noble Lords may also notice a few differences from the amendment tabled on Report.
The noble Lord, Lord Stevenson, and I are in agreement that the Government’s amendment enables breathing space to be designed in a more effective way, building on, rather than duplicating, the work already commenced through the call for evidence, while still allowing for its introduction to take place swiftly.
I will outline a couple of the specific changes. First, the amendment enables the single financial guidance body to be involved in the design of the policy in a more suitable way. The Government plan to complete an extensive policy development and consultation process over the next year. As set out previously, we published a call for evidence last month on this topic, and intend to consult on a specific policy proposal in the first half of 2018. Through this process we will have established a robust blueprint of a breathing space scheme, informed by the expert views of the sector. Given this, we have agreed that it would not be the best use of the new body’s time and resources to require it to redo this work in its entirety once it is set up. Instead, our amendment would require the single financial guidance body to provide advice on specific issues requested by the Government.
The body must provide this advice within 12 months of its being established, which we expect to be in late 2018. On receipt of this advice, we will make regulations to set up the scheme as soon as is practicable—and certainly within 12 months of receiving the advice. This process will enable the body to supplement, rather than duplicate, the policy work the Government will have done up to that point. It could also speed up the introduction of the scheme, given that the advice is likely to be more targeted.
Secondly, we are in agreement that the amendment provides for more flexibility in designing the eventual scheme, potentially allowing for a scheme with a wider scope. For instance, our amendment enables—but does not mandate—the scheme to extend to Wales and Northern Ireland. We will assess the preferred geographic scope of the policy through our consultation, and the amendment allows us to deliver on the outcome of this process.
These are important changes, which we have reached a clear consensus on. However, after long and exhaustive discussions with House officials we have been informed that, for these changes to remain within scope of the Bill, we must take a power to make these regulations rather than a duty. I must be clear: in our view, this wording change has no practical impact. We have been clear, here and elsewhere, that we will deliver a breathing space scheme. This was a manifesto commitment and we are already midway through an intensive policy consultation process. This is simply a necessary step to give us the power we need to establish the scheme through this Bill. The Government’s position is clear. This amendment reflects the strength of our commitment to implementing a successful breathing space scheme. It sees the scheme delivered quickly and effectively and it ensures the sound design, implementation and operation of the scheme.
I turn to Amendment 33, tabled in the name of the noble Lord, Lord Sharkey. I begin by making it clear that this amendment is, with respect, neither necessary nor meaningful; it is actually entirely meaningless. As the House will have seen, the Government have tabled their own amendment to ensure that the Long Title of the Bill reflects the content following the additions made on Report. I must stress that my view remains that it is standard practice to add wording such as that tabled by the Government to the Long Title, and that it is perfectly adequate as tabled.
I also take this opportunity to remind noble Lords that the content of the Bill informs the Long Title; it is not the other way around. Indeed, the Companion to Standing Orders says that,
“amendments to the long title are not in order unless they are to rectify a mistake in the original title, to restate the title more clearly or to reflect amendments to the bill which are relevant to the bill but not covered by the former long title”.
Clearly, it is the third of these purposes which is relevant to this instance. Any amendment to the Title must therefore reflect amendments made, or being made, to the Bill. It is for this reason that we tabled an amendment to the Long Title to accompany the amendments that we tabled in respect of debt respite. The purpose is not to enlarge the scope of a Bill by amending the Long Title.
I am afraid that I must also express my disappointment that the noble Lord, Lord Sharkey, did not feel that he could discuss his original amendment, which he has now withdrawn, with me. Had he done so, I would have pointed out to him that I did not consider that it accurately reflected the contents of the Bill. His current amendment accurately reflects the content of the Bill so—in the spirit of consensus and because, as I have described, the amendment does not affect the scope of the Bill—I am prepared to accept it. On that basis, I shall not move Amendment 34 standing in my name and shall accept Amendment 33, tabled in the name of the noble Lord, Lord Sharkey.
Lord Stevenson of Balmacara
My Lords, I thank the Minister for introducing the amendments in this group which, as she says, will primarily establish a much-needed statutory debt respite scheme. As she also said, it is necessary and important. We have signed some of the amendments in this group and are absolutely delighted to support their inclusion in the Bill.
The failure to include a breathing space in the Bill left a substantial gap in the services which the debt charities need, if they are to offer the best support to those struggling with unmanageable debt, so we have been pursuing it through the various stages of the Bill and challenging the Government to up their game and honour their manifesto commitment. Initially, I think it was clear to the whole House that the Minister was under strict instructions to agree to nothing. But it is to her considerable credit that, after listening to the arguments and consulting widely, she decided that the case had been made. She and her Bill team then went out to bat for the proposal and, from a standing start, secured support for the amendment from her government colleagues. Only those who have witnessed the turf wars that this sort of decision—to introduce a breathing space—must have precipitated can appreciate what has been going on in Whitehall over the last few weeks. I have seen that at close quarters and it is not a pretty sight. I therefore salute the hard work that the Minister and her team have put into this, and I am lost in admiration at their ability to persuade—at ridiculously short notice—her ministerial colleagues to back this amendment today.
Baroness Buscombe
My Lords, I shall be brief. I respond first to the noble Earl, Lord Listowel. I very much welcome the opportunity to write to him on his question about council tax for care leavers. On the scheme, I say to both the noble Earl and the noble Lord, Lord Kirkwood, that the Treasury has already issued a call for evidence. I attended a meeting at the Treasury with officials from Scotland, along with Treasury Ministers and officials to discuss how it works, what the processes have been and the path and history behind the debt respite scheme in Scotland. That is already under way.
Perhaps I should repeat one brief paragraph just to reassure the noble Lord. The single financial guidance body must provide advice within 12 months of being established, and on receipt of this advice, we will make regulations to set up the scheme as soon as is practicable, and certainly within 12 months of receiving the advice. It must be no later than 12 months, but we shall make every effort to do it as soon as we can.
I should also add that the scheme can apply to public debts, but we do not want to prejudge the consultation that we are progressing. A number of questions that the noble Lord raised rightly rest with the consultation process.
Baroness Altmann
I intervene briefly to ask my noble friend for some gentle reassurance about the issue of cold calling. I am enormously grateful that we have the debt respite scheme agreed, and the new wording, on which I congratulate the department, and the new wording for the Long Title, which explicitly includes cold calling. Can my noble friend reassure us that the ban on cold calling that the Government intend to introduce will be as effective as possible and that, rather than using the ICO, which has very broad powers, the direct regulator—in particular, on pensions, the FCA—will be responsible for enforcing the ban? Regulatory imposition and enforcement by existing regulators is surely more effective in achieving compliance than relying on enforcement of widely drawn regulation.
This weekend, a story in the Mail on Sunday exposed the problems of nuisance calls to vulnerable elderly people about funeral plans. It was absolutely clear how ineffective the ICO has actually been in enforcing a ban on cold calling. It merely tries to sweep up the mess afterwards. It is cited as saying,
“where we find the law has been breached we will … take … action”.
Baroness Buscombe
I am so sorry to interrupt my noble friend, but there is no amendment in respect of cold calling tabled at Third Reading, and therefore we cannot speak to it. I reassure her that we have already committed to introducing legislation to ban cold calling in the other place.
Baroness Buscombe
“( ) Where the single financial guidance body provides information, guidance or advice to a person in pursuance of one of the functions mentioned in subsection (1)(a) to (c), it must consider whether the person would benefit from receiving information, guidance or advice in pursuance of any other of those functions (and it must ensure that SFGB delivery partners are under a similar duty).”
Baroness Buscombe
Baroness Buscombe
“Debt respite scheme: advice to the Secretary of State
(1) The Secretary of State must, within three months of the establishment of the single financial guidance body, seek advice from the body on the establishment of a debt respite scheme.
(2) A debt respite scheme is a scheme designed to do one or more of the following—
(a) protect individuals in debt from the accrual of further interest or charges on their debts during the period specified by the scheme,
(b) protect individuals in debt from enforcement action from their creditors during that period, and
(c) help individuals in debt and their creditors to devise a realistic plan for the repayment of some or all of the debts.
(3) The matters on which the Secretary of State may seek advice include (but are not limited to)—
(a) the appropriate person to administer the scheme (and the single financial guidance body may recommend the creation of a new body for this purpose);
(b) whether the scheme should apply in England only, or whether it should also apply in Wales or Northern Ireland (or both);
(c) the scope and design of the scheme, for example—
(i) the types of debtors and the types of debts it should cover; (ii) the types of protections it should give;
(iii) the time period for which the protections should apply;
(iv) what the obligations on debtors and creditors should be during any period for which protections apply, including any period of a repayment plan;
(v) the consequences of a failure by a debtor or a creditor to comply with a repayment plan;
(d) how the scheme should work, for example—
(i) how an application should be made for the protections given by the scheme;
(ii) suitable arrangements to keep creditors informed;
(iii) whether there should be a central register of persons admitted to the scheme;
(e) how the scheme should be implemented.
(4) The single financial guidance body must provide the advice sought within 12 months of its establishment.
(5) The Secretary of State must publish the advice.”
Baroness Buscombe
Baroness Buscombe
“the “devolved authorities” means— (a) the Scottish Ministers,
(b) the Welsh Ministers, and
(c) the Department for Communities in Northern Ireland;”
Baroness Buscombe
Baroness Buscombe
My Lords, I announced on Report in response to amendments tabled by the noble Baroness, Lady Meacher, the Government would bring forward amendments to introduce an interim fee cap in respect of PPI claims management services. Amendments 25, 26, 27, 29 and 30 honour that commitment—and I am sorry to see that the noble Baroness is not in her place.
As noble Lords are aware, this Bill already puts a duty on the FCA to cap fees charged in respect of financial services claims. This will ensure fair and proportionate prices for consumers using these services. However, as we have previously discussed, the implementation of the new regulatory regime and an effective, robust cap will necessarily take some time. This is a particular concern, given that the FCA’s PPI claims deadline may have passed by the time the FCA’s fee cap is in place. That is why the Government are introducing an amendment to set a fee cap at 20%, excluding VAT, of the claim value. The interim fee cap will apply to both CMCs and legal services providers that carry out claims management services in relation to PPI claims, to be enforced by the relevant regulators. It will be enforced by relevant regulators from two months after the Bill receives Royal Assent, until the FCA is in a position to implement its own cap. This cap will complement the range of measures in relation to PPI and other financial claims that the claims management regulation unit has announced. These include banning upfront fees and banning charges, where it is identified that the consumer does not have a relationship or relevant policy with the lender, as well as ensuring that all cancellation charges are reasonable and that consumers are provided with an itemised bill setting out details of what they relate to. This package of measures will support the Government’s aim to ensure that the claims management sector works in the interests of consumers by protecting them from excessive fees.
On Report, I also committed to tabling a government amendment to extend the FCA regulation of claims management to Scotland, should the UK and Scottish Governments agree that position. I am pleased to be able to confirm that the Scottish Government have now written to the UK Government to confirm agreement to extending regulation there. It highlighted that the situation in Scotland has changed since this issue was first discussed earlier this year. Legislation is currently progressing through the Scottish Parliament that will allow Scottish solicitors to offer increased funding options to clients on a no-win no-fee basis. As a result of these changes, Scottish solicitors will no longer need to set up CMCs to offer damages-based agreements to clients, and the CMC landscape is expected to change significantly.
To ensure that CMCs are not able to take advantage of this potential gap in regulation by targeting Scottish consumers, the UK and Scottish Governments have now agreed that FCA claims management regulation should extend to Scotland. This will ensure that there are appropriate regulatory standards in place to deal with CMC practices across Great Britain. These amendments follow up on my commitment on Report and do just that, extending FCA regulation of CMCs to Scotland, which will ensure that Scottish consumers are protected in the same way as those in England and Wales.
I note that the constitutional position of this issue has not been entirely straightforward as CMC regulation clearly concerns a mix of reserved and devolved matters. The regulation of the legal profession in Scotland is of course devolved, whereas matters of competition and aspects of consumer protection are reserved. It is the UK Government’s view that CMC regulation concerns reserved matters of competition and consumer protection. The Scottish Government have confirmed that they will seek the legislative consent of the Scottish Parliament for the CMC provisions as part of the wider legislative consent Motion for this Bill.
For the purposes of record, I should note that the UK Government’s view is that only Clause 20(4) relating to consumer advocacy is relevant to the legislative consent process, although I am aware that the Scottish Government might take a broader interpretation of how much of this is covered by the LCM. Nevertheless, the crucial issue here is that we have agreement that FCA regulation of CMCs should cover Scotland. I believe that this represents a sensible outcome which will benefit and protect consumers across Great Britain.
I am sure your Lordships will agree that the introduction of an interim restriction on charges in respect of CMCs is a positive step forward in ensuring that the claims management sector works in the interests of consumers. I am sure you will also agree that it is desirable to extend FCA regulation of CMCs to Scotland, given the change in circumstances there. I beg to move.
Baroness Kramer
My Lords, I apologise, as when I last spoke, I attributed to the noble Viscount, Lord Trenchard, a very eloquent speech that was made on cold calling and the way it targets vulnerable people, when it was the noble Viscount, Lord Brookeborough, who made that speech. I apologise to both parties. If I have any excuse, it is that I confuse my own children, and one of them is male and the other is female, so it is even more embarrassing.
As regards this group of amendments, my only regret is that the cap on fees is set at 20%. It would have been better to have a lower cap. However, we congratulate the Government on the underlying principle of taking temporary action because it is very likely that by the time the FCA gets its grip on this issue we will be beyond the reach of future PPI claims. However, other than that, I once again thank the Minister for being responsive to the issues that have been raised all around the House, including this one and those of cold calling, debt respite and financial inclusion. This is a very important move by the Minister and her name will be attached to these issues well into the future.
Lord Hunt of Wirral (Con)
My Lords, I declare my interests as set out in the register, as I have just entered the 50th year of my partnership in the global legal firm DAC Beachcroft. I also chair the British Insurance Brokers’ Association. Colleagues will recall that I have made a number of speeches about the need to regulate the claims management sector. Further reform is urgently needed, but these amendments are a step in the right direction and I welcome them.
One of the biggest problems posed by CMCs is the potential for consumers to lose a large proportion of their damages in fees, despite the fact that the level of expertise required for a CMC to manage claims is remarkably low. The regulation of these firms should therefore be consistent across the whole sector. I will just mention two significant benefits that come from what the Government are now doing. First, we will have a robust authorisation regime based on understanding the business models of individual CMCs, which will prevent those firms that do not offer good value for consumers operating. Secondly, we will have personal accountability for senior managers of CMCs to ensure that when a firm is struck off, its directors cannot simply resurface as a new CMC.
The FCA now has the power to cap under these amendments, but it should urgently consider extending the cap to other claims to address the drastic spike in claims related, for instance, to gastric sickness while on holiday, to which the noble Earl, Lord Kinnoull, drew attention in earlier debates. It is no coincidence that there has been this massive surge in claims, just as CMCs prepare for the deadline for bringing PPI claims and the introduction of measures to tackle the high number of whiplash claims. We are therefore dealing with quite a range of possible actions that the Government need to take.
I was disappointed, not by anything my noble friend Lady Buscombe has ever said or done, but because the Government published a consultation response last week entitled Cutting Costs for Consumers in Financial Claims which was completely silent on any plans for action in the sector. By need for action I mean the need to control charges in the personal injury sector, especially as the Government move forward with long overdue plans for whiplash reform. Question 20 in the original consultation paper was:
“Is there a need to consider further fee controls in other regulated claims sectors such as Personal Injury or Employment in future?”.
I do not know what the replies to that question were but, sadly, there was complete silence in response. I just hope that, as the FCA prepares to regulate this sector, it will bear in mind at the height of its agenda the customer/consumer detriment from the actions of CMCs, which we have debated many times in this House. At last, it appears that action is being taken, but it will have to go much wider than these amendments, although they are a very good start.
Baroness Buscombe
Perhaps I may respond quickly to my noble friend Lord Hunt. Both we and the Financial Conduct Authority are aware that our plans for whiplash reform could have an impact on this market. I reassure him that the FCA will certainly keep this sector under review and will monitor developments closely during the implementation phase.
Lord McKenzie of Luton (Lab)
My Lords, given the strong consensus that has emerged from the noble Lords who have spoken on these amendments—the noble Baronesses, Lady Kramer and Lady Altmann, the noble Earl, Lord Kinnoull, and the noble Lord, Lord Hunt—I can be brief. We support these amendments and we also support the provisions in the Bill, particularly in relation to a senior manager regime. That is very important.
Amendments 14 to 24 respond to the Scottish Government’s request for the regulation of CMCs to be extended to Scotland, and they will also help to negate the concerns that have been expressed about cross-border planning.
With regard to Amendment 25, although she is not here today, we should place on record our thanks to the noble Baroness, Lady Meacher, for leading the charge on this issue. As others have noted, the cap has been set at 20% exclusive of VAT, which is at the upper end of the range on which the Government consulted. However, we should see that in context. Currently it is suggested that the average fee rate for CMCs is some 37% of gross revenue, which is almost double the level at which the cap has been set.
It may be appropriate to remind ourselves of the scale of PPI, which I know will be coming to an end in August. I think that banks’ finance companies have paid out more than £26 billion in compensation over recent years. That is an extraordinary amount of money, and I wonder what that injection of funding to the consumer has done to the economy. It is important that the cap bites as soon as possible. Can the Minister confirm that the cap will apply to charges arising after the entering into force of Clause 21—just two months after this legislation comes into force—notwithstanding that the claims to which they relate may have preceded that? Can she confirm that it is not the date of the claim that is relevant for these purposes but the date when the compensation is paid?
Amendment 29 would appear to limit the application of the cap so that it does not apply to Scotland in respect of charges relating to claims prior to the transfer of regulation to the FCA. Perhaps the Minister could confirm that my understanding is correct. It would also seem to deny the application of Schedule 4 to Scotland. This schedule is concerned in part with transfer schemes in relation to the FCA. Perhaps the Minister could say what, if any, restructuring in Scotland might be affected by this change and how it would be affected if Schedule 4 were not applied to it.
Overall, we support these important amendments and look forward to the Minister’s reply.
Baroness Buscombe
I thank the noble Lord, Lord McKenzie. I am so afraid of making a mistake at this late stage that I would prefer to write to him in reply.
Baroness Buscombe
Baroness Buscombe
“PPI claims and charges for claims management services: general
(1) This section and sections (PPI claims: interim restriction on charges before transfer of regulation to FCA) and (PPI claims: interim restriction on charges after transfer of regulation to FCA) make provision for a fee cap to apply in certain circumstances to charges for regulated services provided in connection with a PPI claim.
(2) The following provisions explain terms used in those sections.
(3) The fee cap applicable to the amount charged for regulated services provided in connection with a PPI claim is 20% of the amount recovered for the claimant in satisfaction of the claim.
Accordingly, where nothing is recovered (whether or not a claim has been made or concluded) the fee cap is zero.
(4) But the charging of a reasonable amount for work done for the claimant is not to be regarded as exceeding the fee cap for a PPI claim if—
(a) the amount is charged for regulated services provided in connection with the claim,
(b) no other amount is charged for those services,
(c) the claimant has terminated the agreement governing the provision of such services (whether before or after the making of a claim), and
(d) the termination was not achieved by the cancellation of the agreement during a cooling off period available to the claimant by right (whether conferred by the agreement or otherwise).
(5) References to a claim are to a claim (however described) seeking compensation, restitution, repayment or any other financial remedy or relief, whether or not the claim is made or could be made by way of legal proceedings.
(6) References to the amount charged for regulated services provided in connection with a PPI claim are references to a sum comprising all amounts charged for such services in connection with the claim (whether or not charged under a single agreement), exclusive of VAT.
(7) References to the amount recovered for the claimant, in relation to a PPI claim, include a reference to any amount which (instead of being paid to or to the order of the claimant)—
(a) is set off against a debt due from the claimant to the person against whom the claim is made, or
(b) is paid to any person other than the claimant (whether a person providing regulated services in connection with the claim or any other person) with a view to discharging the whole or part of a debt due from the claimant.
(8) In this section references to regulated services are—
(a) so far as relevant for the purposes of section (PPI claims: interim restriction on charges before transfer of regulation to FCA), to be read as referring to regulated claims management services, and
(b) so far as relevant for the purposes of section (PPI claims: interim restriction on charges after transfer of regulation to FCA), to be read as referring to any service which is a regulated claims management activity.
(9) “PPI claim” means a claim relating to the selling of payment protection insurance (whether it concerns amounts paid by the policyholder or otherwise).
(10) “Regulated claims management services”—
(a) does not include any reserved legal activities of the kind mentioned in section 12(1)(a) or (b) of the Legal Services Act 2007 (exercise of a right of audience or the conduct of litigation), but
(b) otherwise, has the same meaning as in the Compensation Act 2006 (see section 14 of that Act).
(11) “Regulated claims management activity” has the same meaning as in the Financial Services and Markets Act 2000 (see the definition inserted by this Act in section 417(1) of that Act).
(12) “Section 22(1B) specified activity provisions” means provisions of an order made under section 22(1B) of the Financial Services and Markets Act 2000 (as inserted by this Act) which specify a kind of activity as a regulated activity within the meaning of that Act.
(13) “The FCA” means the Financial Conduct Authority.”
Baroness Buscombe
“( ) Sections (Debt respite scheme: advice to the Secretary of State) and (Debt respite scheme: regulations) extend to England and Wales and Northern Ireland.”
Baroness Buscombe
“( ) Sections (PPI claims and charges for claims management services: general) to (PPI claims: interim restriction on charges after transfer of regulation to FCA) come into force at the end of the period of two months beginning with the day on which this Act is passed.”
Baroness Buscombe
My Lords, I would like to take a moment to reflect on the Bill and its passage through your Lordships’ House. This is important legislation that will benefit members of the public and provide a sustainable legislative framework for public financial guidance and the regulation of claims management companies in the future. It has improving financial capability at its heart and I am proud to be associated with it.
At Second Reading I said that I hoped we would have constructive engagement as the Bill progressed through this House. Your Lordships have not disappointed. The Bill has rightly been accorded due and diligent attention from noble Lords across the House, and I would like to thank all those who have engaged on the Floor of the House and also in the many meetings we have had outside.
I would like also to thank my noble friend Lord Young of Cookham for all his help and assistance as the Bill has progressed. He has been a tower of strength and a more than able co-pilot throughout.
Finally, but importantly, I would like to thank the Bill team and officials across the Department for Work and Pensions, Her Majesty’s Treasury, the Department for Digital, Culture, Media and Sport, and the Ministry of Justice. Many of them have put in incredibly long hours to support my noble friend and me during debates, facilitate briefing meetings and provide the updates, letters and briefings that many noble Lords have received. I may add that other noble Lords, in particular the noble Lord, Lord Stevenson, referenced the cross-departmental support we have had. It has been amazing and has made an enormous difference to the outcome of the Bill.
Throughout the passage of the Bill we have listened to the arguments and suggestions made by noble Lords, and, in many cases, have agreed and brought forward amendments that strengthen it. I think we can all agree that this Bill leaves here in good shape, and I believe that this is in no small part due to the helpful and constructive manner in which all sides of the House have engaged with it.
Lord McKenzie of Luton
My Lords, I will say just a few words. I start by thanking the noble Baroness, Lady Buscombe, for her kind words. We are grateful again for the open-minded manner in which she and her co-pilot, the noble Lord, Lord Young, have approached the Bill. I never had the opportunity to ask him whether Luton Airport was on the flight path, but I will try to on a future occasion.
Invariably it is said at the end of a Bill process that the House of Lords has improved the Bill from its starting point. While tenuous in some instances, it is definitely true with this Bill. Support across the Chamber has enabled the framework for a debt respite scheme; consumer protection on cold calling; strengthening access to information and guidance on accessing pensions; a duty of care on setting standards; requiring that pensions guidance functions are provided freely and impartially; strengthening offences of mimicking; as well as securing the dashboard. These changes have come about because, broadly, we have had a shared analysis of what the Bill could achieve; a shared analysis with the Lib Dems and Cross-Benchers as well as with the Government, including the noble Baroness, Lady Altmann.
We are very grateful for the proactive approach of the Bill team, which went above and beyond in trying to fit our amendments into the confines of the scope of the Bill. I do not know how many variations of the debt respite provisions the team had to cope with, but there were many. I offer my thanks to the Lib Dems for their joint working on some key areas, among them the noble Lords, Lord Sharkey and Lord Kirkwood, and the noble Baroness, Lady Kramer.
Finally, I thank my colleagues, my noble friend Lady Drake, our pensions supremo who unfortunately is not in her place today, and of course my noble friend Lord Stevenson for his experience and passion on matters of the debt space. It has made my role a good deal easier.
Mental Health at Work
Baroness Buscombe Excerpts(6 years, 7 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Haskel
To ask Her Majesty’s Government what is their response to the review of mental health and employers, Thriving at Work, published on 26 October.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I am pleased to say that, as the Prime Minister announced, we have already accepted the review’s recommendations that specifically apply to the Civil Service. In addition, the Government will support and encourage the wider public sector overall in taking forward the recommendations wherever possible. We are still considering the wider recommendations and plan to respond to the review later this year.
Lord Haskel (Lab)
My Lords, I, too, welcome what the Prime Minister said about implementing this report. She spoke about the Civil Service and the NHS. What about other sectors of the public service where people work under stress—the police, the fire service and, yes, education? Will the Government make sure that the implementation of this report becomes part of the inspection regime by organisations such as Ofsted, Her Majesty’s Inspectorate of Constabulary or even the Care Quality Commission?
Baroness Buscombe
My Lords, I entirely agree with the noble Lord’s response to the review. It is very important that we encourage all across the public and private sectors to take up the very important recommendations made in it. The Prime Minister said that vital to this priority is the need to have a comprehensive cross-government plan which transforms how we deal with mental illness, not only in our hospitals and crisis centres but in our classrooms, on our shop floors and in our communities. It involves everyone in society. All of these issues will impact on overall well-being, occupational health and the ability to work.
Baroness Eaton (Con)
My Lords, we know that work can be extremely helpful to those with mental health conditions. Can my noble friend tell me what is being done to support people with these conditions to get back to work?
Baroness Buscombe
Indeed I can. We are more than doubling the number of employment advisers embedded in the Improving Access to Psychological Therapies programme to enable more people to receive integrated mental health and employment support so that they can remain in, return to or find work. We have developed an enhanced mental health training programme for jobcentre work coaches—and, following testing, we expect to make it available later this year to all work coaches who would benefit from it.
Lord Fox (LD)
My Lords, the Minister will note that the report endorses the idea of the well-being premium. This was developed by the West Midlands Commission on Mental Health, which was chaired by my right honourable friend in the other place Norman Lamb. The approach is designed to incentivise employers not only to improve the mental health of their employees but to address their physical health and obesity issues. Does the Minister agree that it is high time that we tried some different ways of improving employee health and will she confirm that funding will be coming forward to fund the trial that the West Midlands commission is proposing?
Baroness Buscombe
I entirely agree with the noble Lord and thank him for giving me early notice of his question. The West Midlands commission has undertaken important research into mental health and its impact on the public sector. Government officials are working positively with the West Midlands Combined Authority to explore ideas and undertake work that will support positive action on mental health in the region. The noble Lord is right to say that different things have to be looked at, including different ways of improving people’s health and well-being. Indeed, as the immediate past chairman of the advisory board of the Samaritans, this is something very close to my heart. However, I cannot confirm an answer to his question referring to costs, so I will write to him.
Baroness Sherlock (Lab)
My Lords, I, too, welcome this report. The authors state at the beginning:
“We start from the position that the correct way to view mental health is that we all have it and we fluctuate between thriving, struggling and being ill and possibly off work”.
I have to say that I love that; it is a really positive way to understand mental health. I realise that the Minister will need to take time to reflect on the recommendations in the report, but when she comes to respond, will she acknowledge that her department has a couple of specific responsibilities? The first is that it is an enormous employer with more than 80,000 staff: and, secondly, it runs programmes with the unemployed. Will she ask her department to think about recommending how it might go about modelling with its own employees a healthy environment for mental health? More specifically and perhaps more challengingly, will she reflect again on the programmes for assessing whether people who are suffering with mental health problems should be in work? I ask this because there have been a number of concerns that the nature of the assessments is actually making people’s mental health worse rather than better.
Baroness Buscombe
I thank the noble Baroness for her helpful questions. I am proud to say that the Department for Work and Pensions is leading the way in terms of the enormous amount of support already available to its staff. However, she is entirely right to say that there is much more that we can do. We need to work across government, and that is why we are thinking carefully before responding to this review. Her question about assessments for people with mental health issues is very appropriate. We are making sure that people with long-term disability issues do not have to go through the assessment programme more than once when it comes to work capability. Of course there is more that we can do, but I think that we have made an amazing start.
The Lord Bishop of St Albans
My Lords, there are many valuable statistics in the report, but also some quite worrying ones. Apparently 35% of the people interviewed thought that if they had had depression they would be far less likely to get any sort of promotion, while half of those interviewed said that they would not be willing to discuss mental health issues with their line manager. First, in the light of that, is there not a pressing need for a new public mental health awareness campaign? Secondly, will the Minister look into the contribution that workplace chaplaincy can make to addressing this problem?
Baroness Buscombe
My Lords, I hope that we can continue to use this report and the response to the review as part of building awareness of that. The right reverend Prelate is absolutely right. We understand more than in the past that mental health conditions are a barrier to work but, if we can help more people into employment, work can be part of the solution for many. I very much take on board his suggestion that workplace chaplaincy is an example of where people can seek guidance and help. Sometimes it is important to think about whether it can be done very quietly and anonymously. There is a lot to think through. The review is an enormous step forward. We want to become one of the leading nations in the world in supporting mental health.
Baroness McIntosh of Hudnall (Lab)
My Lords, does the Minister accept that in particular sectors it is sometimes the actions and behaviour of government itself that brings about stresses that some people in certain areas find very hard to cope with? I am thinking in particular about education, which was mentioned by my noble friend in his Question. A constant barrage of change and new requirements is very difficult for people who are already working under very high pressure to accommodate. Will she say whether her department or any of her colleagues’ departments take this into account when they assess how they bring new requirements to bear on the people who depend on them?
Baroness Buscombe
I thank the noble Baroness for her question and say straightaway that in the Department for Work and Pensions we have introduced a new system of line managers so that people always have someone they can go to immediately for help. The truth is that people in both the public and private sectors are under enormous pressures off and on in their lives, as we have said. The reality is that people face pressure, whether from government or through family crises. A lot of it begins at home and we know that conflict in the home can lead into the workplace and affect people’s ability to cope. We need to focus on the coping strategies, whether in the workplace or elsewhere. This review is about supporting people into work.
Financial Guidance and Claims Bill [HL]
Baroness Buscombe ExcerptsTuesday 31st October 2017
(6 years, 7 months ago)
Lords ChamberRead Full debate Financial Guidance and Claims Act 2018 View all Financial Guidance and Claims Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 1-R-II Second marshalled list for Report (PDF, 110KB) - (27 Oct 2017)
Lord Kirkwood of Kirkhope (LD)
My Lords, I shall make just two quick points in support of the speeches that have already been made. I am very much in favour of the amendment but the timing is really important. I say that because universal credit, as we all know, has some introductory rollout problems, such as establishing debts in a way that can sometimes overwhelm new applicants, given the 42-day waiting period. If some magic process could put in a breathing space immediately, that would give succour, support and some respite to families who will almost certainly now face arrears, particularly rent arrears. Therefore, time is of the essence and I hope that the Government will bear that in mind.
I also agree with the point that has just been made about public sector bodies. The Government should perhaps be able to do that anyway by getting people within the public service to be more reasonable about the way they prosecute the recovery of debt.
My second point, which is really important to me, is that the presence of this opportunity in Scotland completely changes the atmosphere in which negotiations can take place. People start acting a lot more rationally and are not driven by fear into doing things and making undertakings which, in their innermost hearts, they know they cannot fulfil. The circumstances are thereby compounded, which makes everybody’s position worse. In Scotland, the ability to just stop the clock, step back and think rationally about the solutions over a longer timeframe transforms the circumstances of families in distress. It is very important that we get this done quickly and take advantage of the experience north of the border, where such an approach has been demonstrated to be worth while and to work.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I thank all noble Lords who have taken part in this very important debate—indeed in all the debates that we have had on this crucial issue since Second Reading.
As noble Lords will be aware, the Government’s manifesto contains a commitment to deliver a breathing space scheme that would give heavily indebted consumers a period of respite from creditor enforcement action, further interest and charges for up to six weeks. Where appropriate, they would be offered a statutory repayment plan to help them pay back their debts in a sustainable way.
I am grateful, as I said, for the helpful contributions during all our debates from noble Lords, and from the noble Lord, Lord Stevenson, in particular, on the important topic of protecting heavily indebted consumers. Noble Lords will have seen, just last week, that the Government have taken their crucial first step towards delivering this manifesto commitment by launching an extensive call for evidence. I might just say here, as noble Lords have asked about public sector debts, that the breathing space call for evidence seeks views on that. We want to ensure that the scheme is designed in the best possible way to support consumers.
The noble Lord, Lord Kirkwood, referred to universal credit. It is right that I point out to noble Lords that all those going on to universal credit are entitled to up to 50% in advance payments, and in some cases they can receive it on the same day they sign up. So, there should not be a huge increase in debt because of those early days.
In addition to support from this House, the announcement of the call for evidence has been positively received by a wide cross-section of the debt advice sector. For instance, The Children’s Society has said it is “delighted” with the announcement, the Money Advice Trust agreed this was “good news” and Citizens Advice said:
“It’s good to see the government taking action on problem debt”.
We plan to continue to engage closely with these bodies and other stakeholders over the coming months to develop our policy.
Baroness Buscombe
I have to make it very clear to the noble Lord that I am not in a position to make a firm commitment. All I can do is say that we have worked well together through the passage of the Bill thus far, and it is right that he should feel that he could trust what I have said so far, and trust in me and my team to do everything we can to make sure that we can do what he has asked for. But I cannot make a commitment because of the constraints, which I think that he knows I am under, in terms of how the system works. Given the government amendments that are coming forward today and those that came forward last week on Report, I feel that we have had a considerable degree of consensus thus far, and I would be so sorry if that were to end now, because I think that we can do more.
Lord Elystan-Morgan (CB)
The Minister tangentially mentioned devolution here, raising the question as to whether there has been any discussion between Her Majesty’s Government and the Ministers in Wales, for example. It is in the realm of devolved authority, I believe. The Welsh Government would be wholly justified in saying, “This is a matter solely for us”. As she will know, on many occasions such as these, the devolved Administration will say, “We’re quite happy for you to legislate on this matter”. Has any discussion to that end taken place at all?
Baroness Buscombe
My Lords, the amendment relates to the specific pensions guidance requirements set out in Clause 3 that the single financial guidance body must provide as part of its general pensions guidance function. The amendment seeks to increase the take-up of this particular guidance by members of the public when they wish to access or transfer their pension.
I am grateful for the opportunity to reference the Pension Wise service, which is currently delivering the guidance described in Clause 3. The Pension Wise service evaluation, published last week, shows that the service is incredibly well regarded by its customers, with customer satisfaction at 94%—a figure referred to by several noble Lords.
The amendment is driven in part by figures that suggest that Pension Wise is not reaching enough people. However, our contention, as my noble friend Lord Young set out in Committee, is that assessing take-up volumes is far from straightforward and that the picture is much better than the figures published by the FCA would suggest. In fact, I recently met with Pension Wise and it was very clear to me that a huge number of people are accessing guidance just on the website.
As noble Lords said, the amendment is driven also by the FCA’s recent interim report on the retirement outcomes review. The report raised some issues, which noble Lords have referred to, and the FCA has proposed a number of remedies. These include additional protections and measures to promote competition for consumers who buy draw-down without taking advice.
The FCA is actively engaging with government, regulators, industry and consumer bodies before it delivers its final report in the first half of 2018. We should take decisions about how to proceed in the light of the fullest information possible. This will ensure that we make interventions that go to the heart of addressing any weakness in the system and ensure people make informed choices for their circumstances.
The amendment would oblige the FCA to make rules requiring pension providers to ask individuals with personal or stakeholder pensions whether they have had the specific pensions guidance set out in Clause 3 when they require access to, or individual transfer of, their pension assets. Beginning with individuals requiring access, it would be helpful if I take a moment to remind noble Lords about the retirement risk warning rules, which are in force today and will continue to be in force when the new body is established.
The FCA already requires that when a person has decided in principle to access their personal or stakeholder pension pot, and before the action is concluded, the pension provider must ask the individual whether they have received pensions guidance or regulated advice. If the person says that they have not or if they are unsure, the FCA requires that the firm must explain that the decision is an important one and encourage the individual to use pensions guidance or to take regulated advice. If the person says that they have had their pensions guidance or regulated advice, or if they insist on proceeding, the FCA requires the firm to give the individual appropriate risk warnings.
These warnings must be relevant to the chosen method of access and, where the pot is over £10,000, the provider must ascertain information about the individual’s circumstances to tailor the warnings. Risk factors that should be covered where relevant are: the individual’s health; loss of guarantees; whether the person has a partner or dependants; inflation; whether the person has shopped around; sustainability of income in retirement; tax implications; charges, if a person intends to invest their pension savings; impact on means-tested benefits; debt; and investment scams.
These retirement risk warnings are in addition to other FCA rules that require pension providers to tell people with personal or stakeholder pensions: first, that free and impartial guidance is available from Pension Wise to help them understand their pension options; secondly, how to access the guidance through the internet, over the phone or face to face; and, thirdly, that they should seek guidance and consider taking independent advice to help them decide which option is most suitable for them.
Pension providers must include this information with the wake-up packs that people are sent when they approach retirement or, importantly, when they contact them about accessing their pension—I always smile when I reference the fact that the packs are called “wake-up” when they are for those approaching retirement.
It may also be helpful to remind the House that the FCA also requires pension providers to include the Money Advice Service booklet, Your Pension: It’s Time to Choose, or materially the same information in wake-up packs sent to members with personal or stakeholder pensions. This provides information and guidance on pension options and where to go for more help, including Pension Wise and the Pensions Advisory Service. Again, I say to noble Lords that I was amazed and hugely encouraged by the extraordinary expertise and experience that exists within those organisations, particularly when I visited the Pensions Advisory Service, where there are people with 30 or 40 years’ experience in the financial services industry giving advice to people over the phone—over the counter, as it were—and on their websites and by email. The booklet also covers essential information about tax, the importance of shopping around and avoiding scams. I hope that noble Lords will agree that this existing regime already provides individuals with important information and strong encouragement to take advantage of guidance and advice before accessing a pension pot.
I now turn to individuals requiring a transfer of their pension. Noble Lords will be aware that many transfers have the express aim of accessing the pension freedoms, and they are protected by the measures I have just spoken about. A large proportion of other transfers from one registered scheme to another can be a routine decision to consolidate pension pots to keep financial affairs simple. This can often deliver better value for members, and adding friction to what is essentially an administrative process could directly inhibit member engagement with their pension.
It is also the case that there are existing requirements in relation to transfers from one registered pension scheme to another. In a transfer situation, the Government are keen that members with valuable guarantees are aware that they have them and of the implications of giving them up. Where an individual has safeguarded benefits—for example, a guaranteed annuity rate—the current provider would need to determine the value of those benefits. If that value is more than £30,000, the individual must have received regulated advice from an authorised financial adviser before the transfer can go ahead.
From April 2018, pension providers must give members with guaranteed annuity rates and similar guarantees more personalised information. This should detail the guarantees they hold and their value, and must be sent at the point they risk giving them up, when they seek a transfer or request access to their pension. There is also a legal obligation for trustees to act in members’ best interests, and the FCA requires that providers treat customers fairly. As well as highlighting guarantees, many pension providers encourage members to think about the implications of transferring, particularly in relation to exit fees and charges.
To sum up, pension providers are consistently cited by around half of the people who contact Pension Wise as the place they first heard of the service. Pension Wise is working with pension providers to ensure that signposting is as effective as possible and with employers locally and nationally to encourage take-up of the service. This includes a major pilot project with Tesco, where Pension Wise appointments are delivered in the workplace. This is in addition to national advertising of the Pension Wise service through a variety of media channels, which has been used since the service was launched in 2015. That has clearly contributed to increased awareness of the service, borne out by the significant increase in the number of people using it.
I appreciate the sentiment behind the amendment and agree that more people should take advantage of the excellent service that Pension Wise provides. However, I do not agree that the amendment is the way to achieve it. It is essentially a reimagining of existing obligations that the FCA already places on providers. As I have explained, the FCA has already made rules, in force now, which place strict requirements on providers when engaging with an individual about accessing their pension.
My noble friend Lady Altmann said that this would be a major step forward, but the rules are already in place. There is no problem with the Treasury—this was referenced by the noble Viscount, Lord Thurso. We already have the rules in place. Take-up of Pension Wise guidance is increasing and bringing together all the offers in this area under one roof. The single financial guidance body will make it easier for people to take advantage of the excellent services available.
For the benefit of noble Lords who have just joined us in the Chamber, this is supposed to be a framework Bill to set up the single financial guidance body—without too many additional powers or burdens placed upon it over and above those which are necessary to take this forward. I trust that, with this reassurance, the noble Lord will feel able to withdraw his amendment.
Lord Sharkey
I thank all noble Lords who have spoken in the debate. I note the support for the amendment from all sides of the House. I note also that the Government seem to rely in their argument on essentially unsubstantiated claims for the performance of Pension Wise in reaching people. The low level of take-up is the problem we are addressing. No matter what current and elaborate arrangements the Minister may tell us are in place, they are not working.
The amendment sets out at no cost—no downside—a simple proposal. It intervenes at an absolutely critical point in the pension process, as people begin to access or transfer their pension assets. We do not claim that it will prevent all bad or suboptimal decisions but we believe that giving people this last chance for information and advice is sensible, prudent and fair-minded, particularly for the most vulnerable people and those most at risk. It is clear—again, given the low take-up figures for the information and advice services—that this is needed. I do see the point of doing all we can to help people make good decisions about their future financial well-being, especially at this critical point in their lives. I would like to test the opinion of the House.
Baroness Buscombe
“( ) In determining whether to approve the standards, the FCA must have regard to the needs of people who are receiving, or who may seek to receive, the information, guidance or advice to which the standards will apply.”
Baroness Buscombe
My Lords, during our debates at Second Reading and in Committee, the noble Baroness, Lady Drake, raised a concern about the Financial Conduct Authority’s focus in approving the service standards for the body. The noble Baroness and other Members of the House stressed the need for the body’s standards to be focused on supporting and safeguarding members of the public. The Government agree that it is important that the standards should be designed with the needs of the public in mind. People’s needs should be at the heart of how services are delivered by the body and its delivery partners.
For example, users of the body’s service will need a variety of delivery channels to be available. They will need the people giving guidance or advice to have the required skills to do so, and they will need information to be presented in a clear and fair way that is not misleading. Members of the public should expect needs such as these to be met by the service, and we expect the standards to be designed to make sure that the body’s services meet those needs.
This amendment makes it clear that the FCA, in undertaking its role to approve the body’s standards, must consider the needs that members of the public have in accessing information, guidance and debt advice through the body. This includes not only people who are using the body’s services, but those who are likely to need information, guidance or advice provided by the body in future. I have already stressed the benefits of including the FCA in the standard-setting process for the body. The FCA currently sets the standards for the Pension Wise service. Figures published last week show a 94% customer satisfaction rating, and these standards are firmly centred on customer needs.
For example, Pension Wise standards include that a guidance provider must have the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to it; people using the service must be able to change to a different delivery channel; the service must be accessible to people under relevant equalities legislation; and the delivery of the service must be consistent across all delivery channels. These are a few among many Pension Wise standards which are focused on ensuring the service meets the needs of the people who use or will use Pension Wise guidance.
This amendment places a clear obligation on the FCA to have regard to the needs of members of the public when approving the single financial guidance body’s standards. By making this explicit, I trust that noble Lords will agree that this addresses any concerns they may have that the FCA would not take seriously people’s needs when approving the body’s service standards.
I shall turn briefly, if I may, to Amendment 26 in this group. As noble Lords will be aware, the activities of the single financial guidance body are funded by a levy which the Financial Conduct Authority collects from sections of the financial services industry. One part of that industry involves a payment service provider. Clause 10(11) defines a “payment service provider” by reference to the Payments Services Regulations 2009. Since the Bill was introduced into your Lordships’ House, those regulations have been replaced by the Payment Services Regulations 2017. This amendment therefore seeks to update that reference so that it refers to the new regulations.
I hope noble Lords will agree that we should keep the Bill up to date and with this minor amendment we will do so. For this reason, I hope that noble Lords will be willing to accept this amendment. I beg to move.
Baroness Drake (Lab)
My Lords, I support government Amendment 25, and thank the Minister for her reflections on the issues raised in Committee. The amendment is a very helpful addition to the Bill because it makes it clear that the FCA, which is an economic regulator, authorises the standards of the new financial guidance body and ensures that they are complementary to the objectives of that body—to improve consumers’ financial ability and their ability to make informed decisions. I support the amendment and thank the Minister.
Baroness Buscombe
Baroness Buscombe
“False claims about provision of information etc
(1) It is an offence for a person to hold himself or herself out (or where the person is a body, to hold itself out) as providing information, guidance or advice on behalf of the single financial guidance body when that is not in fact the case.(2) It is a defence for a person charged with an offence under this section to prove that the person took all reasonable precautions and exercised all due diligence to avoid committing the offence. (3) A person guilty of an offence under this section is liable on summary conviction—(a) in England and Wales, to imprisonment for a term not exceeding 51 weeks or a fine, or both;(b) in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding level 5 on the standard scale, or both;(c) in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding level 5 on the standard scale, or both. (4) In relation to an offence committed before the commencement of section 281(5) of the Criminal Justice Act 2003, the reference in subsection (3)(a) to 51 weeks is to be read as a reference to 6 months.(5) Proceedings for an offence under this section may be instituted in England and Wales only by or with the consent of the Director of Public Prosecutions.(6) Proceedings for an offence under this section may be instituted in Northern Ireland only by or with the consent of the Director of Public Prosecutions for Northern Ireland.”
Baroness Buscombe
My Lords, at Second Reading and in Committee, the noble Baroness, Lady Drake, highlighted the importance of protecting the public and the integrity of the single financial guidance body. I am grateful to her for raising those issues and have considered them carefully. It is essential that people know that they can trust the single financial guidance body, so that they make steps to get the help that they need to make effective financial decisions.
The amendments will make it a criminal offence for someone to hold themselves out as providing information, guidance or advice on behalf of the single financial guidance body when that is not the case. It will prohibit the impersonation of the body itself, in phone calls or via webpages, and of the body’s delivery partners if the impersonator claims to be providing services on behalf of the body. The provisions are designed to make it easier to prosecute individual members of organisations where the offence is committed by an organisation. As with the existing offence for Pension Wise, the new offence is summary only. It proposes a maximum sentence of 51 weeks in England and Wales although, until the commencement of Section 281(5) of the Criminal Justice Act 2003, the maximum sentence is six months. The maximum sentence in Scotland will be 12 months and in Northern Ireland six months. The offence also allows the courts to impose fines—an unlimited fine in England and Wales, and a maximum fine of £5,000 in Scotland and Northern Ireland. Criminal justice is a devolved matter in Scotland and Northern Ireland; that is the reason for the differences in sentences and fines.
The new offence will provide an additional deterrent to existing criminal offences such as fraud. It will send out a strong message that impersonating the new body is illegal and carries significant penalties. In practical terms, the offence will make prosecutions of offenders more likely, because the evidential burden of proving that a person or organisation impersonated the new body is likely to be lower than that required to prove that fraud had been committed. Unlike fraud, there is no need to prove intent to make a gain or to cause a loss for this offence. However, where scams and fraud are particularly serious, the offence does not limit in any way the ability to prosecute the criminals with offences that attract higher sentences—for example, fraud, which carries a maximum custodial sentence of 10 years.
Noble Lords will be interested to know whether the offence will also protect the branding of the existing service providers. The noble Baroness, Lady Drake, suggested in our previous debate that people might continue to recollect the brand names of Pension Wise, TPAS and MAS—the Money Advice Service—before they began to recognise and remember the name of the new body. I reassure noble Lords that we anticipate a controlled transition between the existing services and the new body. The intellectual property of the existing services will transfer to the new body. That will include the brands and website domains of the existing services.
If people search for or telephone the existing services, we expect that they will be automatically transferred to the new service and, where existing brand names are to be discontinued, that would occur only when the new brand had gained sufficient recognition. That will ensure minimal drop-off from people looking for government-sponsored guidance but being unable to find the correct website or telephone number. Ensuring that customer traffic is not lost will be important throughout the transition period.
In that way, the opportunity for scammers to exploit public recognition of the branding of the existing services will be minimised. The protection that the new offence offers extends to the brands that the body uses. If fraudsters and scammers pretended to be MAS, TPAS or Pension Wise and the body was still using those brands to market its services, that would also be an offence under the amendment. This provision therefore ensures that the legacy names of the existing services are protected for as long as those brands are actively used by the new body.
The offence will apply to all the services offered by the new body. I trust that noble Lords agree that the amendments provide comprehensive protection for the body and the public. I beg to move.
Baroness Drake
My Lords, I support government Amendments 27 and 28, and thank the Minister for her personal efforts on this matter, which are appreciated because it is very important. The amendments are welcome in making it clear that it is a criminal offence for organisations falsely to present themselves as providing a service on behalf of the new guidance body. They are thorough in addressing the actions of the corporate body and the individual officers in those guilty organisations. I particularly welcome the Minister’s reassurance about handling the TPAS, MAS and Pension Wise brands. That is an excellent statement, which I was not expecting. I compliment the department on having thought through in such detail how it can protect those names—so thank you for that.
However, I shall spend a little time on the issue. Spelling out in the Bill that it is a crime to mimic will act as a powerful deterrent, and a deterrent is certainly needed because of the potential human cost of such fraudulent activity. That is illustrated even now by existing cases, such as the person who received a letter with their details on it, which had not come from their pension administrator, claiming that they wished to leave the company pension scheme. The letter asked them to choose whether to withdraw, transfer or take out the paid-up option and to return all policy documents. The website of the company sending the letter advised that it was legitimate and said to be aware that scammers were imitating it. Then, there was the lady who reported the actual Pensions Advisory Service to the Information Commissioner’s office as she believed that it had rung her and she was registered with the Telephone Preference Service. The number was traced to a company bearing a near identical name to TPAS. There are numerous other cases of people being contacted by companies mimicking the public pension advisory services, offering a pension review and persistently pressing individuals to sign to transfer a DC pot; or offering a free pension review and sending a courier round to collect the documents; or claiming to be part of a post-Brexit government-sponsored pensions review.
These impersonators are ingenious in their hunt to claim fresh victims. The documented work of several government agencies, be they police, the Revenue or the regulators, reveals the extent of organisations implying that they are regulated when they are not, some falsely carrying warning messages against scams. A mechanism designed to protect consumers is now being used to dupe them. The Financial Services Compensation Scheme, further to previous public warnings about fake emails from fraudsters promising compensation payments, has issued a new warning about a scam website using the logos of the FCA and the Prudential Regulation Authority to give it false credibility. The Pensions Regulator has just put out a further release advising that it has launched new online warning messages, using animation, circulated via Facebook, Twitter and YouTube, urging consumers to keep their eyes and ears open for scams.
The new financial guidance body will have a substantial remit and a considerable reach out to the public. The damage that can be done to the body and the interests of consumers by those falsely claiming to be providing its services, be they on finance, debt or pensions, could be considerable if not controlled. I support these amendments, which provide a welcome strengthening of the Bill, and thank the Minister for bringing them forward.
Baroness Buscombe
“Offences under section (False claims about provision of information etc) committed by bodies corporate etc
(1) If an offence under section (False claims about provision of information etc) committed by a body corporate is proved—(a) to have been committed with the consent or connivance of an officer of the body, or(b) to be attributable to any neglect on the part of such an officer,the officer, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly.(2) In subsection (1)“officer”, in relation to a body corporate, means—(a) a director, member of the committee of management, chief executive, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity;(b) an individual who is a controller of the body.(3) If the affairs of a body corporate are managed by its members, subsection (1) applies in relation to the acts and defaults of a member in connection with the member’s functions of management as if the member were a director of the body corporate. (4) If an offence under section (False claims about provision of information etc) committed by a partnership is proved—(a) to have been committed with the consent or connivance of a partner, or(b) to be attributable to any neglect on the part of the partner,the partner, as well as the partnership, is guilty of the offence and liable to be proceeded against and punished accordingly.(5) In subsection (4) “partner” includes a person purporting to act as a partner.(6) If an offence under section (False claims about provision of information etc) committed by an unincorporated association other than a partnership is proved—(a) to have been committed with the consent or connivance of an officer of the association or a member of its governing body, or(b) to be attributable to any neglect on the part of such an officer or member,the officer or member, as well as the association, is guilty of the offence and liable to be proceeded against and punished accordingly.(7) Proceedings for an offence under section (False claims about provision of information etc) must be brought—(a) where the offence is alleged to have been committed by a partnership, against the partnership in the firm name;(b) where the offence is alleged to have been committed by any other type of unincorporated association, against the association in its own name.(8) Rules of court relating to the service of documents have effect in relation to such proceedings as if the partnership or unincorporated association were a body corporate.”
Baroness Buscombe
“FCA general rules: information about the availability of guidance
After section 137FBB of the Financial Services and Markets Act 2000 insert—
“137FC FCA rules: disclosure of information about the availability of financial guidance(1) The FCA must make general rules requiring specified authorised persons to provide information about the availability of financial guidance to the descriptions of persons specified in the rules.(2) The rules may specify the circumstances in which the duty to provide the information applies.(3) Before the FCA publishes a draft of any rules to be made by virtue of this section, it must consult—(a) the Secretary of State,(b) the Treasury, and(c) the single financial guidance body.(4) In this section—“financial guidance” means information, guidance or advice provided in pursuance of the single financial guidance body’s pensions guidance, debt advice or money guidance function (see section 2 of the Financial Guidance and Claims Act 2017);“specified authorised person” means an authorised person of a description specified in rules made by virtue of this section.””
Baroness Buscombe
My Lords, Amendments 29, 30, 31, 32, 44 and 45 would amend the Financial Services and Markets Act 2000 to require the Financial Conduct Authority to create a new rule requiring specified authorised persons to signpost to the new single financial guidance body. Signposting will help to improve the accessibility of financial guidance and advice to the public. The Government and the Financial Conduct Authority want to see more people seek financial guidance and advice, and at an earlier point so that it can be of most help to them. The new body will place accessibility of guidance and advice at the heart of its services.
The noble Baroness, Lady Drake, tabled an amendment in Committee which would require the FCA to create a new rule requiring all relevant firms regulated by it to signpost their customers to the new single financial guidance body. When she did so, the Government stated their wholehearted agreement that signposting could help to improve public access to guidance. We are grateful to the noble Baroness for raising these matters. We have considered them carefully and, as a result, have tabled this amendment which takes forward the spirit of her earlier one. I hope noble Lords will be satisfied that the Government have heard their concerns, and addressed them through this amendment. The amendment will put a clear duty on the FCA to set rules to secure effective signposting to financial guidance and advice for those most likely to benefit from it.
I also thank the noble Lords, Lords Sharkey and Lord McKenzie, my noble friend Lady Altmann, and the noble Earl, Lord Kinnoull, for tabling Amendment 29A. This would amend the Financial Services and Markets Act 2000 to require the FCA to create a new rule, which would require specified authorised persons to refer persons specified in the rules for financial guidance, and specify the manner and circumstances in which the duty to refer applies. As we understand it, the noble Lord, Lord McKenzie, has indicated that “refer” is a more involved process than providing information about the availability of financial guidance. This amendment would mean that, rather than providing information on where to obtain guidance and advice, and allowing people to make their own decisions, specified authorised persons would have to actively refer persons specified in the rules for financial guidance.
We understand that this amendment is driven by the desire to ensure that the people who need financial guidance, such as vulnerable consumers, actually use the guidance available. We can assure noble Lords that the Government are wholly committed to improving the uptake of guidance and advice for people who are vulnerable. In fact, the FCA has already carried out a great deal of work on how it supports vulnerable consumers. Many Peers recently had a helpful meeting with the FCA, which I hope reassured them that the FCA takes its responsibility for vulnerable consumers very seriously.
As we discussed at that meeting, issues regarding access and vulnerability are at the core of the FCA’s mission and business plan, which were published in April this year. In the debate we had last week, my noble friend Lord Young referred to the FCA’s mission, which states that:
“Understanding vulnerability is central to how we make decisions. Consumers in vulnerable circumstances are more susceptible to harm and generally less able to advance their own interests”.
The FCA is due to undertake a number of further projects to understand better the concerns of vulnerable groups, not least through its forthcoming work to develop a consumer strategy through its consumer approach paper, which will be published in the next few weeks. The consumer approach will provide a means for the FCA to measure outcomes for vulnerable customers. The FCA will also work to develop vulnerability mapping so it can ensure it has captured the needs of vulnerable consumers when finalising its business priorities. We therefore think that the intent behind this amendment will already be covered under the FCA’s work.
When reviewing existing rules and developing new rules in relation to the single financial guidance body, the FCA will consider whether there is a need for referral, in addition to providing information. I hope this will assure noble Lords that the amendment is not necessary. In fact, it would add confusion and reduce the FCA’s flexibility to design the new rules in a way that best serves the needs of particular customers.
Furthermore, there is a concern that expanding the duty to cover referrals for financial guidance could prove unnecessarily costly and burdensome to the industry. The FCA has a duty to carry out a cost-benefit analysis of any new rules under the regulatory principles in the Financial Services and Markets Act 2000. FiSMA outlines the principle that a burden or restriction imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction. The Government are therefore reticent to legislate for a duty to refer before the FCA does the necessary cost-benefit analysis and consultation with industry about the exact impact over and above the existing costs.
On identified costs, existing legislation and FCA rules require pension schemes to provide information to customers such as TPAS and Pension Wise services. The FCA also requires mortgage providers to signpost customers to the Money Advice Service, and debt management firms to make people aware of free-to-client advice funded by the Money Advice Service in their first communication.
These rules will be updated to reference the single financial guidance body rather than TPAS, Pension Wise and the Money Advice Service. The Government’s impact assessment has indicated that this will create an estimated direct cost on business of £5.65 million in the first year of the policy. The requirement to create new rules on signposting would be an additional cost. Therefore, we should give the FCA flexibility through this Bill to better identify which additional costs would be effective. I understand and agree with the desire to ensure that people are receiving the guidance and advice they need to make the right decisions for them. I hope that the FCA’s commitment to consider the need for referral will give noble Lords sufficient reassurance.
I beg to move the amendment standing in my name and urge the noble Lords to withdraw Amendment 29A.
Amendment 29A (to Amendment 29)
Lord McKenzie of Luton
My Lords, I can be brief. We welcome the Government’s amendments, which would place in the Bill a duty on the FCA to make rules requiring information to be given to consumers and members of the public by relevant organisations and persons about the availability of impartial financial guidance. This requirement will cover all information, guidance and advice provided by the single financial guidance body.
The substance of our debate on this group has been Amendment 29A, which strengthens the government amendment with the intent of increasing the use of the new financial guidance service by placing a duty on the FCA to make general rules requiring specified persons to refer specified members of the public to the new body for guidance. The FCA must also specify the manner and circumstances in which the duty to refer applies. Therefore, the amendment puts the FCA in the driving seat, which is the thrust of the amendment. The noble Baroness said that this was basically what the FCA was about in any event, in which case I would ask: if we are at one in what we are trying to achieve here on the authority that the FCA should have, why not enshrine it in the Bill?
Baroness Buscombe
I have already spoken in detail on Amendment 29A, so I am possibly at risk of repeating everything that I have said. However, I would ask the noble Lord, Lord Hunt of Chesterton, to refer to Hansard, where he will see that since 19 July we have been discussing the very issue about which he is concerned.
The truth is that we are setting up a single financial guidance body which we hope will be even better than the bodies that already exist when it comes to improving people’s financial capability and giving them regulated advice and guidance. That is the purpose of the Bill. I hope that I have persuaded noble Lords that Amendment 29A is not necessary and that the noble Lord will be happy to withdraw it.
Lord Sharkey
My Lords, I entirely agree with the noble Lord, Lord McKenzie of Luton, that it would be better to have Amendment 29A on the face of the Bill. I think that it is a perfect complement to the elegantly crafted Amendment 29. However, I hear what the Minister says and I beg leave to withdraw.
Baroness Buscombe
“( ) before “, 137SA”(inserted by paragraph (a)), insert “, 137FC”;”
Baroness Buscombe
“(1) The Secretary of State must keep under review the question of whether the single financial guidance body should be dissolved.(1A) If the Secretary of State considers that the single financial guidance body should be dissolved, he or she must carry out a public consultation.(1B) If, after the period of 12 weeks beginning with the day on which the consultation began, the Secretary of State still considers dissolution of the single financial guidance body to be appropriate, he or she must lay before Parliament—(a) draft regulations, and(b) an explanatory document.”
Baroness Buscombe
Amendments 34, 35, 36, 37, 38 and 39 would revise Clause 14 and insert a new clause into the Bill. Clause 14 makes provision for the winding up of the single financial guidance body and for its functions, property, rights or liabilities to be transferred to the Secretary of State or another body. These amendments would add safeguards to the procedures for dissolving the body should that be necessary in the future.
In drafting these amendments, we have listened carefully to the concerns raised in previous debates by the noble Lord, Lord McKenzie, and the recommendations of the Delegated Powers and Regulatory Reform Committee. As a result, we have studied the approaches taken in both the Public Bodies Act 2011 and the Enterprise Act 2016 to provisions to dissolve arm’s-length bodies.
As I explained in Committee, we would expect stakeholders, the public and other interested parties to have the opportunity to give their views before any decision to dissolve the new body was made. We are now putting that beyond doubt by setting out clearly that a public consultation will be required before the Government can lay any draft regulations to dissolve the body.
The amendments also provide assurance that any draft regulations cannot be laid until at least 12 weeks after the consultation has begun. This allows a suitable period of time for consultation and consideration of the responses to take place. In addition, the amendments require that the Secretary of State must, alongside any draft regulations, lay before Parliament a document to explain the rationale behind dissolving the body.
The amendments also give Members of both Houses the opportunity to request that the period for scrutinising the draft regulations be increased from the usual 40-day period to 60 days. During this time, the Secretary of State must have regard to any representations, resolutions and recommendations made by either House, their Members or committees.
I trust that noble Lords will agree that we have listened carefully and responded fully to the strength of feeling on the need for consultation and parliamentary scrutiny. I trust too that they will agree that these amendments provide those important safeguards. I beg to move.
Lord McKenzie of Luton
My Lords, when we debated in Committee an amendment to Clause 14 requiring a more extensive parliamentary process for the dissolution of the SFGB than that set out in the Bill, the Minister promised to reflect on the matter. This she has done and we are grateful for that.
As the Delegated Powers and Regulatory Reform Committee set out in its first report of Session 2017-19, under the Bill as drafted the Minister does not have to be satisfied as to anything before deciding to abolish the body, does not have to consult, does not have to conduct a formal review and does not have to wait a certain time to see whether the new body is working well before deciding to abolish it. Each of those deficiencies appears to have been taken into account in the government amendments. Amendment 39 enables the super-affirmative process to be applied if either House or a relevant committee of either House so determines, and the process is reflected in the detail of the amendment. This requires that the Secretary of State must have regard to the representations received and any recommendations of either House or of a relevant committee. Effectively this means that Parliament can directly influence the terms of the regulations.
We should note that the provisions of Clause 14 have effect not only to dissolve SFGB but to determine where and to whom its functions are to be transferred.
We can support the amendments and I thank the Minister again for addressing the concerns which have been raised.
Baroness Buscombe
Baroness Buscombe
“Regulations dissolving the new single financial guidance body: procedure
(1) The 40-day affirmative procedure applies to draft regulations under section 14 unless, within the period of 30 days beginning with the day on which the draft regulations were laid before Parliament— (a) either House of Parliament resolves that the super-affirmative procedure should apply, or(b) a committee of either House charged with reporting on the draft regulations recommends that the super-affirmative procedure should apply and the House to which the recommendation is made does not by resolution reject the recommendation within that 30-day period.In either of those cases the super-affirmative procedure applies.(2) Under the 40-day affirmative procedure, if after the expiry of the period of 40 days beginning with the day on which the regulations were laid before Parliament, the draft regulations are approved by a resolution of each House of Parliament, the Secretary of State may make regulations in the terms of the draft regulations.(3) Under the super-affirmative procedure, the Secretary of State must—(a) have regard to the matters mentioned in subsection (4), and(b) make the regulations in accordance with subsections (5) to (7).(4) The matters are—(a) any representations,(b) any resolution of either House of Parliament, and(c) any recommendation of a committee of either House of Parliament charged with reporting on the draft regulations,made in relation to the draft regulations during the period of 60 days beginning with the day on which the draft regulations were laid before Parliament.(5) If, after the expiry of that 60-day period, the draft regulations are approved by a resolution of each House of Parliament, the Secretary of State may make regulations in the terms of the draft regulations.(6) If, after the expiry of that 60-day period, the Secretary of State wishes to proceed with the draft regulations but with material changes, the Secretary of State may lay before Parliament— (a) revised draft regulations, and (b) a statement giving a summary of the changes proposed.(7) If the revised draft regulations are approved by a resolution of each House of Parliament, the Secretary of State may make regulations in the terms of the revised draft regulations.(8) Regulations are made in the terms of draft regulations (including revised draft regulations) if the regulations contain no material changes.(9) In calculating the periods of time referred to in this section, no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.(10) The regulations are to be made by statutory instrument.”
Lord Stevenson of Balmacara
My Lords, I too support this amendment, which we discussed earlier and which I think has been re-presented in the expectation that it will commend itself to Ministers, and in the hope that they will look kindly at it. It is absolutely right to consider these cold-calling activities as one of the greatest nuisances of the modern age. Indeed, the Minister herself admitted that they had led her to give up her landline so that she could not be persecuted. But that does not seem to stop them; they just find your mobile phone and get on to that as well, using texts and other means. I cannot wait until they start using drones and other things to deliver their messages in the hand. Maybe at that stage we would have the Government on our side, as they might recognise aerial bombardment as taking it a step too far.
But at the heart of this is the question of trust. The noble Baroness was extremely persuasive on an earlier amendment in suggesting that she could be trusted and was a person of trust. Her work with all of us around the House—we have all had a chance to talk to her about issues of interest to us—can be seen in the amendments that she laid herself and the support she has given to other amendments coming forward. Here is a classic: she gave a commitment at an earlier stage, admittedly in slightly different circumstances, to bring something forward. She let slip that the civil servants are already working on it, which suggests that a great deal of activity has probably gone on around Parliament and departments, because she would not have mentioned it if she did not have some confidence that what was being proposed could have been seen and agreed by other Ministers who have an interest in this area. So I suspect that things are well primed. I do not like defence or guns in metaphors, but if the gun has been so charged and so primed, it seems rather odd that it has been left in a loaded position somewhere close to her office not being used. Trust is something we want to see exercised in practice, and I look forward to hearing the noble Baroness’s comments.
Baroness Buscombe
That is quite an interesting one: any gun should be locked in a cabinet. The amendment tabled by the noble Lord, Lord Sharkey, my noble friend Lady Altmann and the noble Earl, Lord Kinnoull, seeks to ban “unsolicited direct approaches” such as phone calls,
“by, on behalf of, or for the benefit of companies”,
providing claims management services. It also seeks to prevent these companies using data obtained through the use of such methods.
I have spoken previously about the significant steps taken by the Government to address these issues. We have increased the amount that regulators can fine those breaching direct-marketing rules. We have forced companies to display their number when calling you. As we have previously discussed in your Lordships’ House, cold calling is already illegal in certain circumstances, such as where a person has registered with the Telephone Preference Service or has already withdrawn consent.
The Information Commissioner’s Office enforces restrictions on unsolicited direct marketing. The Data Protection Act 1998 requires organisations to process data fairly and lawfully. Organisations must: first, have legitimate grounds for collecting and using personal data; secondly, not use the data in ways that have unjustified adverse effects on the individuals concerned; and, thirdly, handle people’s personal data only in ways they would reasonably expect. A serious contravention of the data protection principles could result in a monetary penalty notice being issued by the Information Commissioner. Depending on the circumstances, this could include a CMC which sought to use data that it had originally obtained through unlawful means.
However, we have listened carefully to the views of your Lordships’ House and fully agree that more needs to be done to tackle the prevalence of nuisance calls across the UK. As I previously explained, there are complex issues to work through, including those relating to EU directives. But I can reassure your Lordships’ House that the Government are working through the details of a cold-calling ban in relation to the claims management industry. To that end, I am pleased to say that I revisit the offer made in your Lordships’ House last week and repeat that the Government intend to bring forward an amendment in the other place to meet the concerns of this House. This amendment will look to ensure that the onus is no longer on the consumer to opt out of marketing calls.
Unfortunately, the amendment tabled by noble Lords would give the FCA a duty it cannot enforce under its current regime. I assure noble Lords that the Government are committed to tackling this issue properly and will consult with the FCA, the CMRU and the ICO to ensure that the government amendment addresses these issues in the most effective way. But if Amendment 42 were accepted, it would not achieve its aim. For these reasons, I urge the noble Lord to withdraw the amendment.
Lord Sharkey
My Lords, I thank all noble Lords who have spoken in this brief debate, but especially the Minister for what she has just said to the House. There is only one possible response to what she said, which is to say thank you and to withdraw the amendment.
Baroness Buscombe
Benefit Rate Freeze
Baroness Buscombe Excerpts(6 years, 7 months ago)
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Baroness Lister of Burtersett
To ask Her Majesty’s Government what is their assessment of the impact of the benefit rate freeze, in the light of the higher rate of inflation than that anticipated in the original impact assessment.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, we currently provide people below state pension age with over £95 billion a year in welfare support. The benefit freeze is part of a package of welfare reforms that is designed to ensure that the system remains sustainable and to incentivise claimants into work. These reforms are working, and we have not had a lower unemployment rate since the 1970s. The changes we have made to the benefits system allow us to target the support we provide to those who need it most.
Baroness Lister of Burtersett (Lab)
I take it from that reply that the Government have not done an assessment. However, independent assessments of the four-year freeze indicate losses of over £800 a year for many two-child families in or out of work, and significantly worse poverty—especially child poverty—inequality and homelessness. My question to the Minister is simple. Do the Government care about the harmful impact of this policy on people who already have so little—yes or no?
Baroness Buscombe
My Lords, we do care, and that is why we are incentivising people into work. All our research shows that workless families are most likely to drive children into poverty. In terms of our reforms, we introduced 15 hours of free childcare for working families. From September this year, we have doubled that from 15 to 30 hours a week in England, worth on average up to £5,000 a child. Since April 2016, the universal credit childcare element has covered up to 85% of eligible childcare costs compared with 70% with working tax credits.
Baroness Sherlock (Lab)
My Lords, these benefit freezes are not reforms; they are simply a cut. Benefits used to rise in line with inflation every year until the Government decided that in future they would not. They have been frozen in cash terms, so all that happens is that people have the same amount of money to pay for food and rent in 2020 as they did in 2015 while inflation goes up. That simply cannot be right. These are people who are too sick to work, who have small children or who are in work but cannot earn enough to pay for the running costs of their household. Therefore, I ask the Minister again: do the Government care about the poorest in our society? If they do, what are they going to do about it, because fine words butter no parsnips?
Baroness Buscombe
My Lords, as I have said to noble Lords opposite, we do care, but we are absolutely clear that work is the best way to get children, in particular, out of poverty. That is why we want to incentivise work, which is the best route, but we need to focus on making sure that people see their wages rise and take home more of their pay packet once they are in work. Our reforms include increasing the national living wage for workers aged 25 and over, cutting income tax for over 30 million people and extending free childcare for working parents.
Lord Stoneham of Droxford (LD)
My Lords, the Government never anticipated that inflation would be double what it was when they originally introduced this freeze on working-age benefits. If they are prepared to look again at public sector pay, why will they not look at working-age benefits?
Baroness Buscombe
I think I said that we are already spending over £95 billion on benefits for people of working age, but we have to ensure that that is fair also to the taxpayer and that it encourages people into work. Before we brought in the Welfare Reform and Work Act, the inflation rate, for example, for most working-age out-of-work benefits, such as jobseeker’s allowance, went up by 21% between 2008 and 2015, while earnings rose by 12%. We want to incentivise work, which we know is the best route out of poverty.
The Lord Bishop of Oxford
My Lords, does the Minister agree that incentivising people back into work and supporting the poorest in our society, including children, are not mutually exclusive? Will she comment on the ways of doing the second alongside the first? Will she also set out the Government’s plans to remedy the current situation, in which the poorest of the poor are falling further behind?
Baroness Buscombe
I absolutely understand where the right reverend Prelate is coming from, but I want to make it clear that we are doing all we can to help those most in need and, for example, maintaining payments for people with additional needs. That is why we will be spending a further £2.5 billion this year to support pensioners and carers and to maintain the value of payments to people faced with the extra costs of disability needs. In addition, we are giving extra support to lone parents and children.
Baroness McIntosh of Pickering (Con)
My Lords, does the Minister agree that memories are extremely short? Does she remember a time when a different Government were in power and pensions were put up by a miserly 75 pence a week?
Baroness Buscombe
I certainly remember that well. It is completely right that we do all we can to support pensioners.
Baroness Watkins of Tavistock (CB)
My Lords, can the Minister comment on the intergenerational difference? Many pensioners pay 40p in the pound in tax and get significant rises because of the triple lock, whereas some of the poorest families who have been referred to recently are having their income reduced in relation to inflation?
Baroness Buscombe
My Lords, it is true that the state pension and benefits for pensioners are exempt from the benefit freeze, but this is because they are generally for people who have permanently left the labour market, meaning they have less ability to increase their income. We are committed to the triple lock for the remainder of this Parliament, but pensioner poverty continues to stand at one of the lowest rates since comparable records began—and we want to keep it that way.
Financial Guidance and Claims Bill [HL]
Baroness Buscombe ExcerptsTuesday 24th October 2017
(6 years, 8 months ago)
Lords ChamberRead Full debate Financial Guidance and Claims Act 2018 View all Financial Guidance and Claims Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 1-R-I Marshalled list for Report - (20 Oct 2017)
Lord McKenzie of Luton (Lab)
My Lords, I start by thanking the noble Lord, Lord Sharkey, for his comprehensive introduction of this important package of amendments, which we support in its entirety. As we have heard, fundamentally it would enable a ban on cold calling across the piece, together with related reporting functions to the FCA on consumer detriment. We should congratulate the noble Lord, Lord Sharkey, on his drafting, which would enable us to proceed now with a ban. We know the detriment that cold calling can bring, not only by CMCs but in the pensions arena, and the harm that can produce.
A number of noble Lords touched on this. The noble Viscount, Lord Brookeborough, talked about vulnerability in the digital age and how damaging that can be. The noble Earl, Lord Kinnoull, spoke about the opportunity to do something today to help deal with a process that causes real mental harm. We agree with that. The noble Lord, Lord Sharkey, talked about the scams around holiday sickness and the impact of the advance of technology if we do not get stuck into this sooner rather than later—the need to deal with the “omnipresent social menace”, as he put it. I agree with the noble Lord, Lord Kirkwood, on his challenge to the noble Lord, Lord Faulks. If it is not in this piece of legislation, when will it happen?
The FCA recently published its Financial Lives Survey 2017, which identified that in the last 12 months, 23% of adults, or 11.6 million, received an unsolicited approach, although of course that does not mean that they would all have necessarily suffered detriment from that. Banning cold calling is not only an opportunity to deal with a nuisance, it is an effective way of disrupting the business models of the scammers and fraudsters. Perhaps this would be an opportunity to get to those higher-end activities to which the noble Lord, Lord Elystan-Morgan, referred.
I know the Minister is supportive of a ban on “every type” of call, because she told us so in Committee, but the strenuous efforts of Ministers have apparently failed to deliver on that aspiration. Notwithstanding the asserted complexity that the legislation might entail, we were told that if it was in scope, it would be in the Bill. It seems that it is in scope. That hurdle has been overcome, so what is the problem? We accept that there may be some complexity in drafting, but surely nothing beyond the wit of parliamentary counsel.
We urge the Government to make progress. Every day that goes by without the ban holds the risk that someone somewhere will be defrauded of their savings, their life turned upside down. We may hear from the Government, as we have before, that there are already restrictions on cold calling and unsolicited direct marketing, but this has not prevented consumer detriment continuing. On several occasions during our debates the Minister has told us she has disconnected her landline. If there is such confidence in the current framework, why on earth would that be necessary?
This is a hugely important issue, which is why we have common cause around the Chamber from pretty much all Benches. This is an opportunity to do something now. If we do not do it now, when will it be? I urge the whole House to support the amendments of the noble Lord, Lord Sharkey.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I thank all noble Lords who have taken part in this important debate with which we begin our Report stage on this important Bill. Amendments 1, 2 and 7, tabled by the noble Lords, Lord McKenzie and Lord Sharkey, my noble friend Lady Altmann and the noble Earl, Lord Kinnoull, would introduce a consumer protection function for the body and a statutory duty in respect of cold calling. I want to say straightaway that we do not believe that Amendments 1, 2 and 7 would depend on each other to work.
Amendments 1 and 7 would set a statutory function for the Financial Conduct Authority to pass on casework from consumers to the FCA on inappropriate, misleading or harassing approaches by financial services providers to consumers, as well as poor behaviour by providers in the areas of activity related to the body. The Government agree with the logic behind this but the Bill already gives the body the power to share information with the FCA under its information-sharing provisions. Specifically, Clause 12 contains a two-way information-sharing gateway between the single financial guidance body and the FCA that allows the disclosure of information, provided it is pursuant to the functions of either organisation. This would include information relating to cold calling on debt advice, debt management and pension access services.
The single financial guidance body will not exist in a vacuum. It will need to work closely with key stakeholders, and Clause 12 is designed to facilitate close working between the body and its sponsor department, the devolved authorities, the Financial Conduct Authority and the body’s delivery partners. The clause allows these key stakeholders to share information with the body and vice versa. The intention is to allow unpublished data, such as performance-related statistics and confidential insights gained into the financial guidance landscape, to be shared. This information may include personal data as long as any disclosure is in accordance with the Data Protection Act. The clause also allows information to be shared regarding suspected dishonest, unfair or unprofessional conduct by those supplying financial services so that the FCA can take appropriate action against the offending firm.
The powers would enable casework to be passed between the body and the FCA. We would expect that, subject to provisions in Clause 12 and the Data Protection Act, the body would share this with the FCA if that were the right thing to do for the individual. The Bill does not require the body to supply information of this kind to the FCA because there will often be circumstances in which it would be more beneficial for the customer to be signposted elsewhere—for example, to the Pensions Ombudsman Service or the Financial Ombudsman Service. As such, it is best for the body and the FCA to work out how this handover could take place using the powers in Clause 12.
To illustrate, let me give an example of what a consumer’s journey looks like today when impacted by fraud or scams, and what we see as the new body’s role to support the consumer. Where the body believes there has been wrongdoing, we would expect it to contact the FCA or other appropriate authorities. If an individual feels that they have been subject to inappropriate approaches or misconduct by an authorised firm, we would expect the new body to recommend to the individual that they contact the Financial Ombudsman Service or the Pensions Ombudsman Service, depending on the particular nature of their complaint. If an individual suspects that they have been contacted by an unauthorised firm or individual carrying out an FCA-regulated activity, it is already possible for the new body to transfer the casework to the FCA.
Furthermore, organisations involved with Project Bloom, a multi-agency group dedicated to tackling pension fraud scams—of which the FCA is part—have an agreed customer journey to which we would expect the new body to sign up. Part of this journey is that, if the individual or the body believes that a customer may have been a victim of a scam, the body should encourage them to contact Action Fraud, which is the UK’s national fraud reporting centre. The body would also recommend that customers contact Action Fraud when a customer or the guider suspects that the customer has been a victim of types of fraud other than pension scams. Action Fraud will collect information from the customer about the alleged fraud, and then act as a co-ordinator to cascade the information to the City of London Police or other relevant local police forces to investigate the issue further.
When you report a fraud to Action Fraud, you are given the option for your contact details to be passed on to Victim Support, a national charity that helps those affected by crime. If you take up this option, you will then be contacted by someone from the charity and offered free and confidential emotional support and practical help. Indeed, the Pensions Advisory Service currently encourages those who have been a victim of a pension scam to come back and contact TPAS for support in rebuilding their retirement savings, and offers a bespoke appointment where they discuss rebuilding pension funds and potential next steps. We would expect that the body would perform a similar service.
I hope this illustrates that a blanket obligation to share casework with the FCA would be unnecessary. A requirement for the body to share the casework could lead to adverse consequences; at worst, this could result in the customer being hindered in getting the right help that they need. I hope this reassures noble Lords that there is provision in the Bill for individuals to be channelled to the appropriate services if they have been victims of fraud or scams. It is of paramount importance that the body helps customers in this situation.
Amendment 2 introduces a statutory duty in respect of cold calling, which has been the subject of most noble Lords’ interventions this afternoon. The amendment seeks to do a number of things: to require the new body to publish an annual assessment of consumer detriment as a result of cold calling; to require the body to advise the Secretary of State to institute bans on cold calling if it thinks that would be conducive to its functions; and to give the Secretary of State the power to introduce a ban on cold calling, if recommended by the guidance body. I assure the House that the Government already do work to consider the impact that unsolicited calling has on consumers. Indeed, we have been clear that there is no place for nuisance calls or texts and there are already a number of measures in place to protect consumers from the impacts of such nuisance calls.
As I noted in Committee, the Information Commissioner’s Office enforces restrictions on unsolicited direct marketing. We have already increased the amount that regulators can fine those breaching direct marketing rules. On top of that, we have forced companies to display their number when calling people, and made it easier to prosecute wrongdoers.
As noble Lords will be aware, cold calling is already illegal in certain circumstances, such as where a person has registered with the Telephone Preference Service or has already withdrawn consent. Furthermore, the Bill already provides the possibility for the body to alert other organisations to any issues relating to cold calling. Clause 12 contains a two-way information-sharing gateway between the single financial guidance body and the FCA that allows the disclosure of information to each other, provided it is pursuant to the functions of either. This would include, for example, information relating to cold calling on debt advice, debt management, and pension access services. This information may include personal data, as long as any disclosure was in accordance with the Data Protection Act. The clause also allows information to be shared regarding suspected dishonest, unfair or unprofessional conduct by those supplying financial services, so that the FCA could take appropriate action against the offending firm.
Lord Rooker (Lab)
My Lords, I am sorry to interrupt, and I have listened to the whole debate, but how can a Government bring forward an amendment in the other place unless there is a vehicle sent from this place to allow them to do so? You cannot simply amend on the exchange like that without an amendment from this place.
Baroness Buscombe
My Lords, I beg to differ. Despite the noble Lord’s extensive experience in another place, it is entirely possible for us to bring forward an amendment in the Commons to introduce such a ban.
As I was saying, we want to ban pensions cold calling because a private pension plan is often an individual’s most valuable asset. A ban will send a powerful message to consumers to put the phone down. My officials recently met a range of stakeholders to explore the details of the ban and are currently working on developing the details of the policy arrangements.
Pensions cold calling is also a complex area which we want to get right. Indeed, the recent discussion with stakeholders uncovered interesting questions around how to define existing relationships and express requests for information. The Government will continue to finalise these complex policy details and we intend to publish draft legislation for scrutiny in early 2018. Following this, we will legislate at the earliest opportunity. This gives us the opportunity to develop legislation which is more carefully targeted and allows us to make proper provision for enforcement which this current draft does not allow.
The Government have listened and want to work at pace to introduce a targeted response which will strengthen the arrangements already in place. However, the proposed approach in this amendment could delay implementation of any such ban. If this amendment were passed, the Government would first have to wait for the body to be set up. It is not expected to be set up and operational until October 2018. Then, recommendations would have to be made to the Secretary of State. No doubt, this would not be immediate because this body will have a huge amount of work to undertake when it is first set up. So it could be at least another year or two before any consideration could be made, prior to a recommendation being put to the Secretary of State to introduce such a ban. Then the Secretary of State would have to make and lay affirmative regulations.
The noble Baroness, Lady Kramer, said that we need protection now. If Amendment 2 were passed, there would be much more delay than if the Government were to wait.
Baroness Kramer
I think the Minister distinctly said that she was considering a ban being introduced in the Commons on cold calling for claims management but not for pensions. So the timetable she has described becomes rather complicated compared with the alternative for which she has not given a timetable.
Baroness Buscombe
I have already made it clear, as we did in Committee, that we intend to bring forward a ban on pension scams. We cannot be entirely accurate on timing because, as the noble Lord, Lord Kirkwood, made clear, we have to find a legislative opportunity. As I have just said, we will introduce draft legislation early next year and that will go through a process of pre-legislative scrutiny. I hope noble Lords will accept that this is very sensible in order to get it right. Indeed, some years ago, this House introduced the possibility of draft legislative scrutiny in important situations such as this. We do not want to get it wrong.
I also say to the noble Lord, Lord Kirkwood, that it is not without this planet to expect and hope that there will be opportunities—gaps in the timetable—for legislation to come forward. Given the timetable for setting up the body and for the many things it will have to undertake in its early months, I suspect that passing this amendment would mean a protracted delay in introducing a ban on CMCs. The noble Baroness knows perfectly well that we cannot introduce the ban on pensions cold calling in this Bill because it is out of scope. CMCs are actually in scope.
Baroness Kramer
This amendment is in scope. It allows the banning not only of cold calling, but of a broader range of issues. The point made from the Labour Benches was that the Government always said they would have done it in this Bill had there been any mechanism for it to be in scope. It is now in scope, which is why we are debating it on the Floor today. We are not debating an out-of-scope amendment.
Baroness Buscombe
That is why I am making it clear that banning pensions cold calling is out of scope of this Bill, but the CMCs are in scope. I am sorry; this is very confusing for noble Lords. I shall focus on what really matters—namely, whether this amendment would bring forward a ban on cold calling. I must stress that that is not the case; there would be a protracted delay.
To reiterate, the Government agree with the spirit of these amendments and will bring forward legislation in this Bill, in the other place, in relation to cold calling for claims management activities. Along with our pre-stated commitment to ban pensions cold calling, I hope that reassures the House.
My noble friend Lord Faulks asked whether the SFGB is the right body to handle cold calling. I stress that I do not believe this is the right duty to place upon this body. It should be the subject of primary legislation. However, the Government intend to bring forward the appropriate legislation that will work in practice. That is the important thing here. My noble friend Lord Trenchard questioned whether this amendment was right and said that we needed to take care to avoid unintended consequences with a complete outright ban that could possibly work to the detriment of the consumer.
I shall detain noble Lords no longer. I hope that the amendment will be withdrawn.
Lord Skelmersdale (Con)
My Lords, before my noble friend sits down, she has given a commitment to legislate, or move an amendment, in another place to cover something like 90% of what is required by this amendment. Since when, the noble Lord, Lord Rooker, questioned the ability of the Government so to do. Surely to goodness, this Bill started in this House and has not even touched another place. Therefore, surely to goodness the Government can do what they like.
Lord Sharkey
My Lords, I am grateful to all noble Lords who have spoken in this debate. I am particularly grateful to the Minister for her close engagement with the matters in these amendments and for her willingness to discuss the issues involved both inside and outside the Chamber. However, I am afraid that the Minister’s objections to Amendment 1 did not have much conviction or force at all, not even when supported by the noble Lord, Lord Faulks. The simple fact is that the SFGB should obviously be in the business of consumer protection. Its remit should allow it to consider, for example, the effect on consumers’ financial well-being of cold calling for financial services. That is what Amendment 1 does, thereby allowing the consequential Amendment 2 to tackle financial harm caused by cold calling. I was grateful for the Minister’s proposals to ban cold calling for CMCs via a Commons amendment, which clearly could be done. However, Amendment 42, which is only a week away, would do exactly the same thing. Why do we have to go round to the other place to do what this Bill would do if Amendment 42 were accepted? I look forward to the Government’s support for Amendment 42 as a means of saving time in the Commons.
I was also grateful for the commitment to publish—I think I heard it correctly—draft legislation on a pensions cold-calling ban. I am sorry that the train of the noble Baroness, Lady Altmann, is due to arrive in only two minutes. However, I think I heard the Minister say that she would publish this in early 2018, which is government-speak for probably June. But I note that there was no indication at all of the timetable for such a Bill, and I refer the House again to the remarks made by my noble friend Lord Kirkwood when it comes to the probability of such a Bill. I am afraid that I did not feel the objections aimed at Amendment 7, though extremely extensive in length, were at all compelling. They were full of “shoulds”, “expects” and “mays”, when in fact “must” is better, which is what the amendment does.
With these amendments we have an opportunity to increase significantly the financial protection of consumers —particularly vulnerable and financially stretched consumers. We can, with this Bill and these amendments, bring about bans on cold calling—not just for pensions, but also for CMCs and DMCs if there is evidence of consumer detriment, as there clearly is. We have argued about preventing cold calling for a very long time, during which the problem has become significantly worse. These amendments would finally address the problem and would address it for whatever creative cold-calling scam comes next off the cold-calling scam production line. These are simple, effective and linked measures which will reduce nuisance, reduce harm and significantly increase the protection of consumers. I would like to test the opinion of the House.
Baroness Buscombe
Baroness Buscombe
My Lords, before turning to Amendment 3, it may be helpful to the House if I were to say now that, in the light of earlier Divisions, the Government will accept Amendment 7 as it is consequential on Amendment 1.
Amendments 3, 5 and 6 address concerns raised by the noble Baroness, Lady Drake, and referred to by other noble Baronesses, including the noble Baroness, Lady Coussins. They provide certainty that the information, guidance and advice services provided by the single financial guidance body and its delivery partners will be impartial and free to members of the public.
As we stated in the Government’s response to the consultation on the single financial guidance body—and as I confirmed in Committee—it has always been the Government’s firm intention that the body’s information, guidance and advice services should be provided free to members of the public. We recognise the concerns that often the people most in need of financial guidance or debt advice are already in financial difficulty. The existing organisations already provide free services and we are clear that this should not be any different when those services transfer to the new body.
In Committee, the noble Baroness, Lady Drake, made a number of very pertinent points about the importance of the new body being wholly customer-focused and not influenced by commercial interests. She highlighted that, in the case of guidance, the body needed to be trusted to take the customer up to, but not into, the “decide and buy” or “decide and act” moment. She stressed that a commercial comparison website that takes commission is very different from a factual comparison table that provides information based on customer needs.
We agree that guidance from a provider with a vested interest in the decision a customer makes carries a greater risk of being partial. Impartiality—ensuring that the person or organisation giving the information, guidance and advice has no vested interest, whether that be the single financial guidance body itself or its delivery partners—should be central to the new body’s ethos. This amendment provides certainty on these two important matters. It places impartiality at the heart of the body’s culture and ensures that its services will be free to members of the public. For these reasons, I beg to move.
Baroness Drake (Lab)
My Lords, I support and very much welcome these government amendments. I thank the Minister for the consideration she has given to the arguments put forward in Committee. These amendments would make the guidance and advice free to the user and impartial. It is very important that it should be free to the user and not vulnerable to ministerial discretion to decide to charge a fee at some later point for three important reasons.
I do not want to prolong the debate, having got the amendments but, just in case there were ever to be reconsideration of the point, I say that if the new body is to be effective in meeting its objectives it needs to be trusted and universally recognised for supporting members of the public and those most in need. To charge for information and guidance would make the relationship transactional, which risks undermining trust and public perception of the purpose and ethos of the service. It also needs to be free to the user if it is to reach the people who need it most. Charging a fee could deter many people on low and moderate incomes. In many instances, getting customers even to seek guidance often needs a pull, and charging just makes that problem more difficult. If the service is not free to the user but subject to a fee, the new body’s priorities and impartiality could be compromised because of potential conflicts over where to put resource from the organisation—towards those most in need or to the services with the greatest potential to raise revenues.
The requirement in the Bill that guidance and advice given must be impartial is very important. The Minister referenced arguments used in Committee that there are so many providers of information and guidance that they nudge or encourage the consumer in directions that are not driven solely by their needs. It will be the fact that the new body is impartial in the advice and guidance it gives that will distinguish it and allow it to build trust and to deliver its statutory objectives. I thank the Minister for bringing these amendments forward.
Lord McKenzie of Luton
My Lords, I too thank the Government for the announcement that the dashboard is to be taken forward and acknowledge the role that has been played by several Members of your Lordships’ House, particularly my noble friend Lady Drake, who with her impeccable logic and powers of persuasion has really led the charge on this. I also acknowledge the noble Baroness, Lady Altmann, who has long campaigned on this issue.
We know that the delivery of the dashboard will be a huge challenge, but it is an opportunity for individuals to see all their savings and pensions in one place, including the state pension. As my noble friend Lady Drake said, the key fact is that it is a single, public service dashboard, so that individuals who use it can have confidence that there will not be a conflict of interest between those seeking to use information and data to sell products and those who are genuinely attempting to help people to understand the pension pots that they have. The data shows that over their lifetime people could change their jobs 11 times. I am not sure how current that is, but 11 changes of jobs could mean as many as 11 pension pots. We know the challenges of small pension pots and how difficult it is for people to access those—they forget where they are. It is particularly an issue for women.
Hearing that the dashboard is to be taken forward makes this a good day. There is lots of hard work to do, and there are many governance issues for your Lordships’ House and others to keep an eye on as it gets developed.
Baroness Buscombe
My Lords, this amendment, tabled by the noble Baroness, Lady Drake, is identical to the one tabled on 17 July 2017, which I have to say sounds an awful long time ago and feels it too. It would require the body to provide a pensions dashboard as part of its pensions guidance function. The purpose of pensions dashboards is to provide a clear picture of all an individual’s pension savings in one place, accessible online. Pensions dashboards are potentially an important tool to help people to take control of their retirement planning. With automatic enrolment, more people than ever before are saving into workplace pensions, and we know that the nature of work is changing, with more people taking a number of jobs in their lifetime—the noble Lord, Lord McKenzie, has just talked about 11 times possibly becoming an average. The ability of people to view their pension savings in one place could make a real difference in assisting them to plan and save for their retirement, including making better-informed choices on the financial impact on their pension provision of working longer if they choose to do so.
I promised to come back on Report with a full statement on the Government’s position on the dashboard project. The Government are firmly committed to the delivery of pensions dashboards and have restated our commitment, as announced last week at the Pensions and Lifetime Savings Association conference in Manchester by the Parliamentary Under-Secretary of State for Pensions and Financial Inclusion in another place. It was announced that, to take forward this work, the Department for Work and Pensions will take lead responsibility for the policy within the Government and manage the next phase of the project. Working with industry, consumer organisations and regulators, the department will conduct a feasibility study to examine the complex issues that still need to be addressed, such as those highlighted by noble Lords today, particularly the noble Baroness, Lady Drake. We will share an update on this work by spring next year.
The very helpful report published on 12 October by the ABI-led pensions dashboard project sets out many of the key questions to be explored, and we will look at its research findings and recommendations in detail as part of the feasibility work. We are grateful to all those organisations involved in the project so far. The aims of the feasibility study will include the following: exploring in more detail what will be of the most use to individuals to help them plan effectively for their retirement, as consumers’ needs must be at the heart of our approach; the viability and implications of different delivery models; determining a suitable framework of governance for pensions dashboards; ensuring that consumer interests are safeguarded and their personal information is protected—as the noble Baroness, Lady Drake, has said several times today, we are talking about providing a safe space for public good so it is incredibly important to get this right—and thinking through issues of regulation, standards, data security and identity verification; establishing how to ensure the widest possible contribution of data from pension providers, bearing in mind that effectiveness will be linked to how much information individuals can see in one place, while also taking account of the potential impact on industry; determining the indicative costs of potential models and how they might be funded sustainably; and setting out a pathway for delivery with provisional milestones and recommendations around communications and publicity.
Baroness Buscombe
Lord Sharkey
“( ) The consumer protection function includes the obligation for the single financial guidance body to pass on casework from consumers to the FCA relating to—(a) suspected inappropriate, misleading or harassing approaches with regard to debt advice, debt management, pension access and claims management services; and(b) suspected dishonest, unfair or unprofessional conduct by those supplying financial services relating to the areas of activity of the single financial guidance body.”
Lord McKenzie of Luton
My Lords, this has been a good debate. I emphasise that we support the amendment, which is no surprise given that I put my name to it. I am sorry that we pre-empted someone: I am happy to step back.
This is a very elegant formulation, which stops a whole list being produced. It instinctively recognises that people might be vulnerable for reasons to do with their circumstances but that this is not necessarily something endemic to them. There are fluctuating circumstances which particularly fit that description: in our short debate we have had discussion of learning disabilities, mental capacity and addictions. A broader issue, but still within the key definition of vulnerability, is isolation. The noble Viscount, Lord Brookeborough, made a very telling point on that. The noble Lord, Lord Kirkwood—I keep calling him my noble friend; we have debated too often over the years—spoke about the impact of vulnerability because of destitution. We should recognise that people may be perfectly fit and able-bodied and have all their mental capacity but if they are broke and have no money then they are potentially vulnerable or in vulnerable circumstances.
The formulation is powerful and succinct and we support it. I hope the Minister will find some way of incorporating it into the Bill—even if not in the precise wording, although it seems excellent to me—so that we can support it.
Baroness Buscombe
I thank all noble Lords who have taken part in this extremely helpful debate. A number of issues have been raised about the scope of the term “vulnerability”. This is incredibly helpful to us and to our overall approach to the Bill. The noble Lord, Lord Stevenson, made reference to his hope that the report of our debate in Hansard will be seen and our words read by those who are charged with taking forward the delivery of this body. I assure the noble Lord that, thus far, everyone I have spoken to who is involved in this world, in the three current bodies, is very aware of our debates and I trust that they will be taking on board what is said.
Amendment 11, tabled by the noble Baronesses, Lady Finlay, Lady Coussins and Lady Hollins, and the noble Lord, Lord McKenzie, would add an element to the body’s strategic function, so it could include issues of access to financial services for vulnerable people in the national strategy. I hope that noble Lords will forgive me for being a bit repetitive, following my noble friend’s remarks in previous debates, but it is important to have this on the record. As I mentioned in Committee, the Government take the issue of financial exclusion very seriously. As my noble friend Lord Young mentioned earlier, the Government are grateful for the important work of the Financial Exclusion Select Committee in highlighting this important issue and will aim to publish their response to the committee’s wide-reaching report ahead of Third Reading.
The Government’s response will address all the committee’s recommendations and bring forward new proposals on how to better co-ordinate across government, regulators and the wider sector to tackle the significant issue of financial exclusion. I see that my honourable friend from another place, Guy Opperman, the Minister for Financial Inclusion at the Department for Work and Pensions, is here. We have been working extremely closely on this Bill and on developing our response to the report.
My noble friend Lord Young earlier highlighted the difference between financial inclusion and capability and the Government’s intention that this body will be designed to build financial capability among the public. The Government have therefore deliberately omitted from the Bill references to financial inclusion and individuals’ access to financial services. An appropriate supply to people of useful and affordable financial services and products is very important, and the Government therefore work closely with the industry regulator, the Financial Conduct Authority, to ensure that appropriate action is taken when the market fails to supply services and products. The amendment would greatly expand the body’s statutory remit and we fear it is likely to create confusion over the roles of Her Majesty’s Treasury and the Financial Conduct Authority, both of which have the relevant responsibilities and powers to influence the supply of financial services products.
Baroness Buscombe
My Lords, I thank the noble Lord, Lord McKenzie, for tabling the amendment. I think we can all agree that raising people’s awareness of fraud and scams relating to financial products is an important matter, and one where the single financial body can, and should, play a role.
All the existing services—the Money Advice Service, the Pensions Advisory Service and Pension Wise—provide information and guidance about fraud and scams and take their role in that seriously. The Pensions Advisory Service—TPAS—has several regularly updated webpages dedicated to pension scams awareness. These provide clear and simple messages warning people to be vigilant and include more detailed information and guidance on, for example, how to spot a scam, how to protect your pension from scams and what to do if you think you have been, or are being, scammed. In addition, TPAS supports a dedicated “identifying a pension scam” tool on its website. It also suggests that people check with it first before proceeding, including by telephone.