Universal Credit

Baroness Buscombe Excerpts

Thursday 16th November 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank the noble Baroness, Lady Hollis, for introducing this very important debate. It has been an impassioned debate and I welcome the opportunity to respond on behalf of the Government. The Government are undertaking welfare reform on a scale not seen since the introduction of the welfare state more than 70 years ago. Universal credit is essential to this agenda, transforming a benefits system hindered by bureaucracy and welfare dependency into one that places personalised support for claimants at its very heart. This support, tailored to the needs of the individual, is transforming lives across the country. People on universal credit have access to more tools than ever before to help them in their search for work and move into work faster than claimants under the system it replaces.

We know that these reforms represent a significant change for many people and we respect that, but this Government are committed to delivering UC safely and fairly to the best of our ability. At every stage of the process to date, we have worked to modify our approach with claimants’ experiences in mind. This is why we pioneered a system of advance payments for those embarking on a UC claim and why we recently ensured that all calls made to the UC helpline are free to users. We continue to spend more than £95 billion a year on benefits for people of working age, illustrating this Government’s commitment to a robust welfare safety net.

When the coalition Government came to power in 2010 it was clear that the benefits system was broken. For too long, and in too many cases, it made more financial sense for people to stay on benefits than to enter employment. A system had developed over the years that limited the hours claimants could work. Inadequate reporting requirements and complex interactions with other benefits all combined to remove incentives for people to take up work. Under UC, 86% of people are actively looking to increase the hours they work, compared with only 38% on jobseeker’s allowance. Even more troubling, the benefits system—the legacy system—made assumptions about people with health conditions or disabilities, wrong assumptions in many cases, condemning many to a life of limited or zero horizons. In contrast, UC brings coherence and simplicity to the welfare system. It replaces six benefit systems with one.

People now deal with one organisation only, through an easy-to-use online journal. They can access their UC account via smartphone, tablet or PC, enabling them to interact with the service all day, every day. However, I will say straightaway to the noble Baroness, Lady Sherlock, that they can also have home visits where necessary—that should be a 100% commitment. As I have stressed, the key achievement of this reform is that it puts work back at the centre of everything we do. This means that people claiming UC can see that work always pays. They can see exactly how much money they will receive each month. UC applies a consistent taper rate to earnings above a claimant’s work allowance, meaning that people are no longer penalised for taking on more work. Thanks to a data feed from HMRC, the UC payment adjusts automatically to take into account fluctuations in earnings. This removes the burden of paperwork and reporting on claimants that exists in the old system.

From the very start of the programme, we have published findings from pilots, carried out analysis and commissioned research into UC. We continuously measure the impact of UC on claimants through our Universal Credit at Work publications, which have acted to highlight the positive effect our reforms are having on individuals. As my noble friend Lady Stroud said, research from these reports shows that people in receipt of UC are more likely to be in work than are people on jobseeker’s allowance. UC claimants spend longer looking for work and consider taking jobs they would not previously have looked at. This positive trend was recently confirmed by new analysis published in September 2017 using a much wider sample group. The concept of “test and learn” is built into the DNA of UC. It allows us to quickly pick up on feedback from staff on the front line and use it to build improvements into each new release of the UC IT system.

During a recent visit to London Bridge jobcentre, I was delighted to hear from staff who praised the collaborative spirit of the new system, with claimants, work coaches and central and local government working together to further refine the service. I have to say, in response to the noble Baroness, Lady Donaghy, that these work coaches were amazing: they are not drowning, they are actually enjoying the work that they do and feel liberated and able to help people daily. In fact, we are employing 5,000 more work coaches to help the system across the country, so that people have this personalised support system. I am looking at the noble Lord, Lord Livermore. I visited a jobcentre in his borough, his designated territory as a Peer. I wonder if he has visited—I think not.

There has been much debate surrounding claimants’ ability to manage under UC’s monthly payment structure. Let me explain that the month-long assessment period is fundamental to the idea of UC. It means that the UC payment can be calculated on the basis of a full month’s income, using real-time information. Beyond the assessment period there is a further time of up to a week to make final checks and for processing the payment. We are working to reduce this time, but let us be clear: of the current tax credits population, nearly 70% are paid monthly or four-weekly.

On the issue of the responsibility for paying rent directly to landlords, the change in this policy is also backed by the evidence. Indeed, much of this policy was introduced back in 2008 under a Labour Government. In 2012 we established projects in six areas across the UK to test claimants’ capability in this area. The results, published in 2013 and 2014, show that the majority of social tenants can manage their finances: they are completely capable and want to manage their finances. We believe that it is important to improve the financial confidence of tenants, many of whom—I think that this is shocking—were previously unaware of how much rent was being paid on their behalf. That is dependency; it is not liberating. The reports highlighted the need to ensure that the right protections are in place, should people fall into arrears, which is why we have put in place a system of alternative payment arrangements for claimants who need them. This means that we can pay rent directly to a landlord to help protect those claimants at risk of eviction. In response to the noble Lord, Lord Kerslake, it is actually a choice: it is either the claimant, the landlord or, indeed, the DWP who can decide whether it is in the claimant’s best interest that payment be made direct to the landlord. To address the point raised by my noble friend Lord Farmer, this, alongside the system of advance payments that I have already outlined, will support those claimants already in debt and help to prevent others from falling into it.

UC also shines a light on those in debt—I saw this when I visited London Bridge—so that work coaches can help them resolve this situation with personal budgeting support. I reference my noble friend Lord Fink and absolutely agree with him about debt. The recently published response to the report of the Financial Exclusion Committee recommends a much stronger focus on financial education in schools. Improving financial capability is at the heart of the Financial Guidance and Claims Bill, currently passing through your Lordships’ House. We all want to see the issue of debt tackled.

For people with health conditions UC offers greater independence and opportunity. Unlike the old system, it does not limit the hours which people can work. This means people with health conditions do not need to choose between starting a career and getting financial support for their disability. As was discussed in your Lordships’ House the other day, it recognises that the ability of people with health conditions to work will change, off and on. UC means you can do both. My noble friend Lord Shinkwin, the noble Lord, Lord Low, and the noble Baroness, Lady Meacher, spoke about people with severe disabilities. The financial support available to them is more generous than before. I take issue with the noble Baroness when she said she did not believe the sums, as they are actually wrong. People in the UC equivalent of the ESA support group get double the ESA equivalent. When we come to move people from these benefits on to UC, we will protect their payments and top up any cash shortfall. We have simplified the system to make this happen. Previously, people with disability had to grapple with seven different payments. Now it is down to one, but it is simply not the case that they will receive less. We have invested £200 million more in universal support, an issue raised by some noble Lords, including the noble Lord, Lord McKenzie.

The rollout of UC has been undertaken carefully, beginning with a small group of claimants in the north-west in 2012. From May 2016, we started rollout of the full service, to all new claimant types, to be completed in September 2018. We will then take stock, before we start to move people on legacy benefits to UC. I am not sure whether all noble Lords are aware of the important point that we have not started moving people who are on legacy benefits to UC. This process of managed migration will not be complete until 2022, with transitional protections offered to legacy claimants throughout. If you were to believe some recent media reports, you could be forgiven for thinking that UC is in crisis: far from it. As noble Lords have said today, public scrutiny—including debates such as this—has a valuable role to play in putting government policy under the spotlight. However, let me be clear: having a job, earning money and building a career is the best outcome for individuals, society and the economy.

As several noble Lords have rightly said, countless studies show that meaningful work increases people’s happiness, fosters social inclusion, and improves mental health, life chances and life expectancy. It is important to stress that, of the total number of households that will move on to universal credit, we are currently only 8% of the way there. By January it will be just 10%; we are not going to rush things. As we roll out universal credit, those on existing benefits whose circumstances do not change will not be moved to universal credit. This will not happen until 2019 and we will provide transitional protection at that point, to make sure that people—homeless, disabled or otherwise—are not worse off at the point of change.

Work is a positive health outcome and UC puts it back at the centre of the conversation about welfare, a point made eloquently by my noble friend Lady O’Cathain. A society where the maximum number of people is in work is a happier, richer, stronger one, in which everyone can feel empowered. It is always the duty of a civilised society to provide help for those unable to support themselves. This is not the same as saying that a life on benefits is the only choice for a person with disabilities or health conditions. That is why this Government make no apology for focusing on what people can achieve, rather than on what limits them.

I turn to a number of points made by noble Lords which I have not yet addressed. I stress to the noble Baroness, Lady Drake, that the benefit freeze is the subject of the next debate, to which my noble friend Lord Young will respond. There has been a concerted effort to misrepresent UC and to paint jobcentres as forbidding places, undermining our efforts to continually improve the system. It is important to make it clear that every two weeks the work coaches in every jobcentre pool their ideas for change. All those ideas and thoughts about improving the system are fed into the centre. We are taking those on board and working with them.

Advance payments for UC are paid within five days and are interest-free. If someone is in immediate need, they will receive a fast-track payment on the same day. We have taken on board the need to increase the awareness of advance payments and their availability, and have informed all work coaches of this. The latest data shows that 52% of new claimants on universal credit are receiving an advance. That shows that people are aware of this support, and using it. Unlike what one noble Lord said, everyone is entitled to an advance payment.

On the subject of jobcentre closures, we are not reducing the level of support we provide to claimants through the reduction in the number of jobcentres—far from it. We are actually streamlining the number. I go through the contracts for the commercial leases, so I know that we are saying goodbye to some that were not accessible or good places to come into. We want to improve and streamline the whole experience for people going into a jobcentre. I again urge noble Lords to experience this themselves: they will see that jobcentres are worlds apart from what they used to be like. It is important for us to modernise and improve that experience. When we close a jobcentre, an outreach service is always put in place within the community, to make sure that local people can access support to get to work.

My noble friend Lord Cormack mentioned targets to sanction claimants. There are no such targets for jobcentre staff. Sanctions encourage claimants to meet their personalised claimant commitment, which is tailored and agreed between the claimant and work coach. On childcare, the best way to help families improve their lives is by supporting parents to get into employment. Universal credit offers parents unprecedented personalised support, including paying up to 85% of childcare costs. This increase to 85% will benefit up to 500,000 working families by an average £60 a month. This means that a growing number of families will get more support to move back into work. I pay tribute to the work of the noble Baroness, Lady Armstrong, who referred to kinship carers, as did the noble Lord, Lord Kirkwood, in the context of welfare reform. I wish to make it clear that if a claimant already has two children in their household and takes on responsibility for an additional child through kinship care, the Government do not wish to dissuade this from happening in the interests of the child, and an exception is provided. The exceptions are an important part of this policy and are there to protect those who are not always able to make a choice about the number of children in their family.

There is much more that I would have liked to have said in response to points made by noble Lords. I conclude by reiterating that UC prepares for work, and helps people to get into and get on in work. The Government are delivering this once-in-a-generation change in a controlled way. We are taking 12 years, from inception to final rollout. At each step of the way we have assessed the impact of UC on claimants. This is a work in progress and we will keep working. As the noble Baroness, Lady Sherlock, said, let us work together to make this right.

Financial Guidance and Claims Bill [HL]

Baroness Buscombe Excerpts

Tuesday 24th October 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank the noble Lord, Lord Stevenson, for moving Amendment 14—tabled by the noble Lord, Lord McKenzie, in Committee—and for this evening’s debate. The amendment relates to the new body’s strategic function to conduct research on the levels of unmanageable debts across England, Wales, Scotland and Northern Ireland, as well as the causes of unmanageable debt and ways to prevent it.

It is right that this House continues to take a great interest in understanding the causes of debt and how the Government can best help those who are struggling. I thank noble Lords again for their ongoing, important contributions on this matter since the introduction of the Bill and beyond. Problem debt, as the noble Lord has said, is such a serious issue, with wide-ranging consequences for those affected by it. The Bill is testament that the Government take the issue very seriously and recognise that there is more work to do to ensure that fewer households slip into problem debt. I understand the worthy aims behind this amendment: to highlight the importance of research on indebtedness and to ensure the new body gives it all the attention this important issue requires. The strategic function of the new single financial guidance body will play a fundamental role in this area. It will give the new body the responsibility to develop a national strategy to identify the most pressing issues and the most effective interventions in financial capability, personal debt management and financial education, working closely with others in the financial services industry, the devolved authorities and the public and voluntary sectors.

However, the Government’s assessment remains that to specifically reference one area of research over others in legislation is not needed. There are many topics that the new body will need to investigate and I have no doubt that it will conduct research on the very issue that the noble Lord suggests. Significant research is already being undertaken by the Money Advice Service, which is looking at the levels and causes of over-indebtedness across the UK. A great deal of the focus of MAS’s financial capability work, and the work that is envisaged for the new SFGB, will support the aim of preventing and reducing problem debt.

I refer, as I did in Committee, to my visit to MAS recently. I was tremendously impressed by the focus of those working there on research. They are trying to bottom out what it is and find out how we can tackle debt from an early age onwards and really make a difference—not just to be tactical about it, but to ask: what is it that leads to this really difficult issue of problem debt? A lot of this debt starts from an early age—as referred to in the previous debate—but it also has to do with people’s attitude to it and so on. Noble Lords should have every confidence that all these people will be very excited to take this work forward with the new body. However, specifying one issue of research in legislation—as we said earlier this evening, in terms of having lists for things—can always be problematic and could risk hindering the body’s ability to take a wide-ranging, strategic approach across the whole sector.

The legislation has specifically been drafted to enable the body to do anything that is conducive or incidental to the exercise of all its functions, and this includes conducting research. So, yes, in response to the noble Lord, Lord Stevenson, we are confident that doing research is a part of the incidental and conducive function, and I am very happy to give that assurance. This will ensure that the body is future-proof and able to have regard to any unforeseen, emerging issues—ones which we have not even begun to contemplate, I am sad to say, and which may confront us in years to come.

The whole purpose of this new body is to improve the financial capability of the public through its delivery and its strategic functions. To do this effectively, it will need to conduct wide-ranging research to fully understand the issues it is addressing, test what works best and learn new approaches. As I hope I have set out clearly today, the Government believe that the new body should have the ability to choose the specific topics it researches in relation to its function and that these should not be specified in legislation.

The noble Lord, Lord Stevenson, also asked whether the body will have the capacity to do this research on a large scale. Yes, it will have that capacity. I have talked to everybody working across the three existing bodies and they see this very much as a part of their role going forward. Therefore, I hope that, after considering these points, the noble Lord will withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for her ringing endorsement of the role of research in the work of the SFGB. I admire her confidence that it will be able to be done, and I am sure that it will be. We hope that it will be one of the things that will be read in Hansard and used as a way of building up the forward work programme. I am still slightly worried about the breadth of the research and the ability to carry it out on a very long timescale. Longitudinal studies take time and a lot of resources, and they have very few results for a long time, so a real engagement at that level will be required. However, given that that is where we are and it is what we are going to do, I beg leave to withdraw the amendment.

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[Lord Stevenson of Balmacara]

It seems rather perverse, right at the very end, to talk about a clause that we have been debating for nearly a whole day and then to propose that it should be struck out and replaced with something else. Also, I wonder whether the clerks understand what we are trying to do here. We have already amended Clause 2 as it currently stands and they have not raised a single eyebrow. Actually, two eyebrows are being raised at the moment but they were not raised earlier when we seemed to stray into the territory of constitutional confusion, although I do not wish to raise that again today.

Let us be quite clear about this. The amendment was meant to be an attempt to aid wider public understanding of what the body is about. When we went through Committee, and certainly when we talked about some of the issues relating to the Bill in meetings, it was felt that we had the wording in the Bill as published before this stage—starting as it did with functions and moving on to objectives—the wrong way round. It was felt that there would be better clarity and a better understanding of what we were about if we could rejig it in a way that focused on the long-term vision of this body, how its constitution and powers supported that long-term vision, and what functions it needed to achieve that objective in the medium term. Amendment 21, in my name, is an attempt to do that. It borrows heavily on discussions with the Bill team, for which I am very grateful, and indeed some of the wording may be rather familiar to the team. It is not far from what appears in the Bill as currently printed, except that it is in a different order. I argue that the way it now reads—and I hope that there will be support for this around the Chamber—provides a much more logical approach to what we are going to do.

In a nutshell, the problem is that if you start with the functions of the body as it may be in the future, you tend to think of those in terms of where we are at the moment with the existing constituent bodies—the MAS, Pension Wise and TPAS. If you detach that from your initial thinking and think only about what will happen to the consumer and the journey the consumer takes in trying to get the information, advice or guidance that they seek, in the appropriate way, it clears up a lot of the confusion that we ran into and the terminological difficulties that we had. They were helpful in that they brought out the problems that we faced, but unhelpful in that they brought us back to confusion about what this body was about.

In Amendment 21, the objectives, coming before functions, are listed in proposed new subsection (1). In proposed new subsection (2) they are now objectives, whereas before they were functions, and then the functions follow. The related powers come after that. It has a clarity of overall shape that commends it, but I doubt that the wording is now sufficient to cope not only with where we might want to see changes coming forward but also in light of what has happened.

I have anticipated an amendment already in the Bill, as of this afternoon, by including within the phrasing of my current amendment the “free and impartial” amendment, which we have accepted. I took a bit of a chance on that but I am delighted that we have agreed that that should go forward, as it should do. There may be others that a little bit of time and work by parliamentary draftsmen could polish up by the time we get to Third Reading. I hope that, when the Minister responds, she might feel it worth taking away this amendment and bringing back something that would substitute for the existing Clause 2 in a way that fulfils some of the objectives that I have set out here today. I beg to move.

[Baroness Buscombe]

My Lords, I thank the noble Lord, Lord Stevenson, for this amendment to Clause 2. I also want to thank all noble Lords who have spoken today in connection with the functions and objectives of the single financial guidance body. We have had a wide-ranging debate, covering matters including financial inclusion, financial exclusion, financial education, scams and fraud, and unmanageable debt. We were also going to debate, and accept as important, the resourcing of front-line services.

I also thank the noble Lords, Lord Stevenson and Lord McKenzie, for the discussions that we have had outside the Chamber in relation to this clause and how it might be reframed. As noble Lords have rightly indicated, Clause 2 is the foundation that sets the whole tone and ethos for how the single financial guidance body will operate. It provides, as we have discussed today, the framework and lens through which the body will exercise its functions and make progress, working with others towards achieving its objectives.

I think that we are all agreed that establishing the single financial guidance body with a framework of broad core functions and objectives provides a sensible and pragmatic way forward. The amendment that the noble Lord, Lord Stevenson, has tabled does four key things. It restructures the subsections in Clause 2 to bring to the fore the body’s objectives. It places an obligation on the body to consider all a person’s information, financial guidance and debt advice needs, and whether they would benefit from receiving other services that the body provides. It seeks to clarify that the body will hold the pen and have some responsibility for ensuring that all parties involved in developing a national strategy make progress on taking it forward. It also seeks to extend the strategy’s financial education element beyond children and young people. I see the value in the intentions behind this amendment.

There is a certain merit in setting out up front what the objectives behind the activities of the body should be. I also see merit in making it more apparent that the single financial guidance body will take the lead in developing a national strategy to improve people’s financial capability and ability to manage debt. These changes could clarify, not only to the body but also to all those it will work closely with, that these are the Government’s and Parliament’s expectations.

I recall that the noble Lords, Lord Stevenson and Lord McKenzie, raised a similar point in Committee about ensuring that, if a member of the public comes to the new body seeking information, guidance or debt advice from two or more different functions of the body, they will be able to access those different functions if needed, as opposed to only one function. I think we all agree that this is important. While this was one of the Government’s stated aims for the single body, I still believe that it is already encapsulated in the Bill. However, I can see that it may be useful to strengthen that point and make it more obvious in the legislation.

We discussed earlier amendments tabled by the noble Lords, Lord McKenzie and Lord Stevenson, and the noble Baroness, Lady Kramer, on matters relating to financial education which seek to extend the element of the strategic function beyond the provision of financial education to children and young people. I do not think it is necessary for me to reiterate the points which I and my noble friend Lord Young made when discussing Amendments 9, 10 and 13, but I am supportive of much of the intent behind this amendment. I feel that we agree on the broad thrust of much of what it aims to achieve. On this basis, I trust, and very much hope, that the noble Lord, Lord Stevenson, will withdraw the amendment to provide some further time for us to consider and refine it before bringing it back at Third Reading.

Financial Guidance and Claims Bill [HL]

Baroness Buscombe Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 13th September 2017 Lords Chamber

[Lord Stevenson of Balmacara]

I rise briefly to support the noble Earl, Lord Kinnoull, in his quest for a more equitable arrangement with the powers that be in terms of the FCA. I think he would be the first to admit that this is a recurring theme in many of his contributions to debates around financial guidance and similar issues. On the surface, it seems extraordinary that a body so well resourced and organised as the FCA should be so diffident in coming forward with helpful advice to get people to work better and more constructively within the sector it is regulating.

This amendment has had to be framed to get it into a debate around claims management but it touches on a much wider issue about all the aspects of the FCA that we are talking about. Indeed, it is about an attitudinal and possibly a conduct approach, which is also part of it. I hope that there is a way to get this matter resolved one way or another because it is part and parcel of the other issues we have talked about in terms of duty of care and responsibility for consumers and the vulnerable. If the FCA—and indeed, by implication, the SFGB—took a more interactive and supportive stance, we would all be better off.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, it is my turn to rise to my feet to support my noble friend Lord Young, who has been more than a co-pilot for this part of the Bill. Perhaps I see myself more as flight observer.

The amendment moved by the noble Earl, Lord Kinnoull, aims to ensure that the FCA helps firms to interpret the FCA rules. I absolutely accept and understand his reasons for tabling this amendment in terms of the importance of that interpretation and in order to be helpful. I agree that ensuring that firms understand the FCA’s rules will be vital to the success of this new regulatory framework, and I would like to draw the noble Earl’s attention to the steps the FCA already takes to ensure that firms are well informed of regulatory requirements.

The FCA undertakes a range of communications activities, including monthly e-newsletters summarising all the main changes that have taken place over the previous month and a programme of regional events across the UK for firms to discuss regulatory issues. The FCA holds round tables and other briefings on specific issues with trade associations and firms to help them better understand how new policy may impact their business models. It also maintains a smaller business practitioner panel which represents smaller regulated firms which may not otherwise have a strong voice in policy-making. I have noticed that the noble Earl has, quite rightly, throughout our debates in Committee focused on those smaller businesses that may not have their own strong voice.

On top of this, the FCA is aware of the need to engage with firms about new regulatory provisions. Building on the approach taken in the consumer credit transfer, the FCA will develop a clear communications strategy to engage with firms as a key part of the transition process. The FCA is committed to alerting firms to changes in regulation that affect them and has several well-established channels to support this—for example, in its regulation round-up, which is a monthly e-newsletter sent to more than 50,000 recipients summarising all the main changes that have taken place over the month. That will have links to further information on the FCA website. There is a programme of monthly regional events called “live and local”, across the UK, for firms to discuss the changes, and round tables and other briefings on specific issues. In addition, the FCA sends over 500 speakers each year to talk at industry conferences and events to discuss regulatory issues, and maintains regular relationships with trade associations.

These actions will help to support CMCs through the authorisation process as they work to meet the FCA’s regulatory requirements in the provision of claims management services. The FCA’s strategic objective is to ensure that the relevant markets function well, which will ensure that the market for CMCs’ services functions well. Communication on that basis is vital. The FCA also has a competitive objective, which requires it to have regard to the ease with which new entrants can enter the market. Of course, being able to understand the rules is critical to that.

I hope that the actions that I have set out help to support CMCs through the authorisation process. This short debate with the noble Earl and the noble Lord, Lord Stevenson, will, I hope, give a nudge to the FCA that it is of critical importance that it undertakes this important issue with care to make sure that the process works. For those reasons, I hope the noble Earl will withdraw his amendment.

[The Earl of Kinnoull]

I am very grateful to the Minister for her words, which I shall have to read a bit more carefully in Hansard. I also thank the noble Lord, Lord Stevenson of Balmacara, for his generous words. I am sorry that he has had to listen to me a number of times on the FCA.

The list of things that the FCA is doing, which the Minister told us about, is much more to do with transmitting than receiving. You do not want to turn up to a round table as a business and talk about a new idea; you want to be able to talk about the new idea with your regulator and say, “Will this new idea work? I am thinking of doing it. Does it fall within section 772B on page 956 of your regulations?”. That is the sort of helpful thing that other regulators around the world have been able to do. In trying to fine-tune our honey trap for UK financial services, we are out of step with the rest of the world—and good regulation is one way in which we will attract more businesses in future to come to British markets.

I hear what the Minister says about that issue and wonder whether it might be possible for her to reflect a bit further about what I am saying, which is a different thing from all the various round tables and letters to 50,000 people and so on. It is about having the ability to have a hotline and to ring up and go to see your regulator to chat through a business issue in relation to the interpretation of blooming complicated regulations. It would be a great step change, and it would be a good opportunity to begin here; they will have to design a whole new system for regulating CMCs, and they could begin by building into the design from day one this element of something that would be very helpful to the small, good firms which I hope will grow up in the CMC space. I think the Minister is saying that she would agree to have a chat in the period before Report. If there were no progress, I might want to bring it back at Report. But on that basis, I am happy to withdraw the amendment.

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[Baroness Buscombe]

I thank all noble Lords who have taken part in this important debate. I thank in particular the noble Lord, Lord Sharkey, the noble Baroness, Lady Kramer, my noble friend Lady Altmann, and the noble Earl, Lord Kinnoull, for tabling the amendments and prompting this debate about cold calling. I think we are all familiar with the nuisance calls and texts that noble Lords seek to address.

However, I fear I shall disappoint noble Lords, but will do my utmost to persuade the Committee that legislating for a ban on cold calling at this stage is not the right thing to do. The arguments against the amendments are twofold. I shall begin with what we are doing by way of this Bill. The Government have put on record their commitment to clamping down on rogue CMCs that bombard consumers with unsolicited nuisance calls and texts, or provide poor service for consumers, by transferring regulatory responsibility to the FCA. Strengthening the regulation of claims management services—good regulation, I might add—should reduce the number of unsolicited calls made by CMCs as they will have to comply with any additional rules that the FCA makes in relation to how CMCs obtain customers or pass their details on to others.

The FCA will consider unsolicited approaches to consumers in the wider context of rules around advertising and marketing. It is too early for the FCA to have decided on specific rules for CMCs. I make that point clear to all noble Lords who entered into the debate on this amendment: this is not something the FCA has had a chance to do before but now, through the Bill, it has the opportunity to decide on specific rules for CMCs. It will consult on its proposals.

There are already measures in place to tackle unsolicited calls. The Information Commissioner’s Office enforces restrictions on unsolicited direct marketing. Unsolicited directing marketing calls to a person who has subscribed to the Telephone Preference Service or told the company they do not wish to be called is prohibited under the Privacy and Electronic Communications (EC Directive) Regulations 2003. In addition, organisations responsible for breaching these regulations can be fined up to £500,000 by the Information Commissioner. In 2016-17, the Information Commissioner’s Office issued more civil monetary penalties for breaches of these regulations than ever before, issuing 23 companies over £1.9 million of fines for nuisance marketing.

There was reference to scams. Of course, scams fall into the sphere of fraud and are therefore criminal. Many cold calls are conducted by unauthorised businesses. CMRU increased its capacity to identify, investigate and take enforcement action against unauthorised businesses, including all call centres marketing unauthorised claims management services. Since these regulations began, CMRU has taken enforcement action against 1,280 unauthorised CMCs. Moreover, in May this year, a company behind 99.5 million nuisance calls was fined a record £400,000 by the ICO. Action is being taken now and the FCA will introduce tougher regulation in this area.

The noble Lord, Lord Sharkey, asked why, if we are able to ban calls for mortgages and pensions, we cannot ban them for CMCs. It is important to differentiate between the two types. The Government absolutely decided that cold colds in relation to, for example, pensions are a special case because the levels of consumer detriment are uniquely high. For some UK customers, especially inexperienced investors, pensions savings may be their largest financial asset. Often, CMC nuisance calls are just that—a nuisance. The potential for customer detriment is therefore also much less.

It is not that this is not an issue for the Government to consider. I say that with some feeling. Strengthening the regulation of claims management services should help reduce the number of unsolicited calls made by CMCs. As I said, there are already measures in place enforced by the ICO.

[Baroness Kramer]

The Minister talked about the current enforcement and recommended it with such vigour. Could she then explain why the number of calls is so great? I think the noble Baroness, Lady Altmann, cited a figure of 50 million and it is growing every year. To my mind, the two things do not tally.

[Baroness Buscombe]

I am trying to make the point that the transfer of claims management company regulation to the FCA will result, we believe, in tougher regulation and should reduce the number of unsolicited calls made by CMCs. What I am really saying is: can we please give the FCA a chance? While there are already measures in place to tackle unsolicited calls, enforced by the Information Commissioner’s Office, unfortunately there is a minority of disreputable companies which flout the law. The ICO will take enforcement action where appropriate; as I have said, in 2016-17 it did so against 23 companies. We need to improve on this and we hope this will happen through tougher regulation.

I hope I have explained the difference between cold calling for CMCs and cold calling for pensions, which we are taking action on. I think my noble friend Lord Deben was suggesting, as indeed were other noble Lords, that we should have a wholesale ban on cold calling, but one has to be really careful what one wishes for. This point about access to justice is very important. Clearly, there are different routes to making unsolicited approaches. If we had a wholesale ban on cold calling, what would political parties do?

[Lord Deben]

I was not going to interrupt my noble friend but since she has mentioned it, the matter is very clear. We are talking about cold calling for a particular purpose. She has to accept that there are 50 million calls and the number is rising all the time, so the present system does not work. It is very simple: we just ban them. Why can we not do this? I do not understand.

[Baroness Buscombe]

I think I have just tried to explain that one of the reasons for transferring the regulatory role to the FCA is to take this forward through good regulation in the hope that it will work. As I was trying to say, we have to be careful what we wish for in terms of access to justice through the means of people being able to receive calls, which we can call unsolicited—such as those made by political parties. That is part of a wholesale ban on cold calling, which noble Lords have referred to.

[Lord Deben]

I am sorry to interrupt my noble friend again, but I specifically did not do that. Better regulation is to ban the calls. That is what better regulation is.

[Baroness Buscombe]

I thank my noble friend for his further response.

To respond to my noble friend Lord Trenchard’s question about whether SMS, email and letters are all cold calling, this is an important point and I confirm that we differentiate between them. Cold calling is the solicitation of business from potential customers who have had no prior contact with the salesperson conducting the call, while unsolicited direct marketing is communication by any means, including email and text, of marketing and advertising material. We genuinely believe that the existing measures I have set out, alongside the new FCA regime, should help tackle CMCs conducting unsolicited direct marketing. I know there is a very strong feeling across the Committee, and we take this on board, but, for the reasons I have set out, the Government do not believe that the amendment is necessary. I hope that the noble Lord will withdraw his amendment.

[Lord Sharkey]

I am extremely grateful for the support of all noble Lords who have spoken. I am especially grateful to the noble Lord, Lord Deben, for his forceful reminder—several times—that this kind of cold calling activity should have no place in our society. It is not necessary, it is damaging, it lures otherwise honest people into crime and it is morally repugnant. Thinking about what the Minister said, I feel that she was right at the beginning: she did disappoint the House.

Financial Guidance and Claims Bill [HL]

Baroness Buscombe Excerpts

Committee: 2nd sitting (Hansard - continued): House of Lords
Wednesday 6th September 2017 Lords Chamber

[Lord McKenzie of Luton]

My Lords, we support the thrust of the amendment, but there is just a query on its precise ramifications which perhaps I may raise now. The amendment states:

“As part of its pensions guidance function, the single financial guidance body must provide information and guidance regarding unsolicited communications and make provision to ensure that members of the public receive this information and guidance before taking any action following an unsolicited communication”.


I am not quite sure how that could be caused to happen; that is, where the knowledge of an unsolicited communication is and how that feeds through to encourage people not to take any action until they have considered these matters. When the Minister winds up, she might expand a little on that.

I certainly support what the amendment is trying to achieve. The idea of taking a power in the Bill to seek to move forward more quickly once it has left this House is certainly worth considering. But I guess that my key message is to the Government. Their response to the consultation document was robust and covered not only cold calling, but we have this equivocation as to when it is going to happen. I find it difficult to understand, given everything that is going on with Brexit, which is changing the world, why we cannot move swiftly to introduce provisions in a vital area where there is clear consumer detriment that is destroying many people’s lives. It would be helpful to have that clarification in the wind-up, and subject to that we support the amendment.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

Perhaps I may give an indication of my support in principle for banning cold calling of every type by saying that I have given up my landline because so many calls now are nuisance calls. They are about pensions and all sorts of other things. Apparently I have more accidents in my car than hot lunches. We have all had enough of it and this is an issue which is close to the hearts of many, if not all, noble Lords.

These amendments seek, under the pensions guidance function, to give the single financial guidance body a duty to provide information and guidance to members of the public about unsolicited communications. I should like to start by thanking my noble friend and all noble Lords for their contributions to this topic at Second Reading and during the first day of Committee. I really do understand that pension scams, and particularly unsolicited communications, have to be dealt with. As I have sought to reassure noble Lords, the Government also take the threat of pension scams extremely seriously and have committed to taking action to tackle the issue. Noble Lords have already made reference to the fact that last month the Government published their response to the consultation on pension scams, and in that document the Government underlined their commitment to bring forward a package of measures designed to tackle such scams.

As noble Lords will be aware, the Government intend to introduce legislation in a finance Bill later this year to tighten the rules in order to stop scammers opening fraudulent pension schemes. Tougher measures to prevent the transfer of money from an occupational pension scheme into a fraudulent one will be introduced following the rollout of the master trust authorisation regime in 2018-19. The Pensions Regulator will be given new supervisory measures to authorise and deauthorise master trusts according to strict governance standards, and the Government will consider how the legislation to limit transfers should align with these measures.

On pensions cold calling, which is the subject of my noble friend’s amendment, the Government’s consultation response committed to bringing forward legislation when parliamentary time allows. I really would like to reassure noble Lords that work is under way to ensure that the ban, which will include emails and text messages, is robust. We will continue to work with stakeholders and those with an interest in this space as work progresses. We hope to be able to outline more about our plans for engagement on Report. I say that, but I also ought to make it clear that, as the noble Lord, Lord Sharkey, has said, while we would love to do this overnight, the truth is that this is not in the scope of the Bill. I wish noble Lords could be flies on the wall at some of the meetings I have had with officials from the DWP and the Treasury, and also with ministerial colleagues including the Pensions Minister. We have been searching every which way to find an opportunity to introduce this legislation. We will not be overcome. We are determined to do it as soon as is practically possible. Indeed, it was not until I became a Minister that I realised how hard it is. It is easier for me now to understand, even after nearly 20 years in your Lordships’ House, how difficult it is to get some of these things done in practice.

I hope my strength of feeling is coming across: we are genuinely working on this as we speak. We are not dragging our heels. There is no lack of willingness. We are absolutely clear that we want to take this forward, but at the same time we need to be really careful about how the legislation is drafted—for example, by being careful not to exclude legitimate transactions and so on. I have the result of the consultation in front of me, which sets out in some detail the reasons why we have to be a little bit careful about how this is drafted, but I assure noble Lords that if it was in scope it would be in this Bill. Unfortunately, it is not in scope and we have been given clear instructions on that by all the powers that be who advise us on drafting of legislation in Parliament.

I turn to the amendment tabled by noble Lords on the pensions guidance function. This function allows for the body to provide information and guidance on matters relating to occupational and personal pensions. The noble Lords’ amendment would see the single financial guidance body given a duty to provide information and guidance on pensions cold calling and a duty to ensure that members of the public receive this information and guidance before taking any action following a cold call.

I will take each part of the amendment in turn and will first talk to the duty to provide information and guidance on pensions cold calling. As my noble friend and all noble Lords will be aware, information on spotting, avoiding and dealing with scams is currently provided by the Money Advice Service, TPAS and Pension Wise. Information on pensions scams is also available via the Financial Conduct Authority’s and the Pensions Regulator’s websites. This function allows for the body to provide information and guidance on matters relating to occupational and personal pensions, but the amendment would give the single financial guidance body a duty to provide information and guidance on pensions cold calling and a duty to ensure that members of the public receive this information and guidance before taking any action following a cold call.

Under the new body’s money guidance function, which will allow the body to provide information and guidance to enhance people’s financial capability, the Government would expect the body to continue to provide information of this sort. However, the Government believe that the new body will be best placed to determine exactly what information and guidance it provides. It will have the ability to assess the landscape and see what information and guidance is already out there. I agree that information on avoiding financial scams is vital, and, as I have already said, the Government expect that the body will continue the existing services’ good work in this area, but I do not agree that it is necessary to specify this in legislation.

On the second part of Amendment 42D, which states that the body should,

“make provision to ensure that members of the public receive this information and guidance”,

after receiving a cold call, I wholeheartedly agree that members of the public should know where they can go to seek information and guidance if they need it. Of course, the Government would expect that any information or guidance that the body provides is as accessible as possible. However, the amendment would not help to achieve this. In practice, it is not possible or reasonable for the body to be required to ensure—the noble Lord, Lord McKenzie, has said it is quite difficult—that people will come to it for help after receiving a cold call. Having said that, I heard an example of this when I was at TPAS. It was absolutely brilliant. It had all been recorded, of course, so one could hear this woman say, “I think I’ve just had a cold call”. Sure enough, this brilliant adviser—the person giving guidance—said, “I’m very sorry to say this sounds very much like a cold call that you should ignore. Well done for calling us, thank you so much”. This is happening daily, as I saw for myself. The body would not know who had received a cold call unless, of course, they went to the service. Even if the industry had access to this information, the body would not have the power to require the industry to ensure that members of the public received information before taking action.

I understand what noble Lords are seeking to achieve with this amendment. However, it would not be helpful to mandate the guidance that the body provides, particularly when there is already a clear expectation that the body should provide it, or to make the body responsible for ensuring that people seek out this guidance. I therefore ask my noble friend to withdraw the amendment.