Financial Guidance and Claims Bill [HL]

Baroness Finlay of Llandaff Excerpts

Report: 1st sitting: House of Lords
Tuesday 24th October 2017 Lords Chamber

[Baroness Kramer]

Obviously, we support these amendments. The Government’s argument has always been that this issue will act as a constraint. However, we think it draws attention to the problem and empowers people. One of our great dissatisfactions historically with the provision of financial education and financial capability is that it does not seem to create people who are more financially capable when they need to be. Amendment 10 raises once again the issue of timing and relevance. We are all human beings and we can go through various forms of training but if we then never use those skills or that information but require it 10, 15 or 20 years later, that is the point at which it needs to be recalled rather than having a tick-box exercise to show that at the age of 16 we took a class on those issues. We want this education to be relevant and to underscore the direction that I hope very much the single financial guidance body will want to take, but is by no means required to take, of looking for relevance and at situations where there is critical need, care leavers being one of the most obvious examples of that. We have known for years that care leavers get themselves into enormous trouble because of their lack of awareness of these issues but no body has felt it necessary to step into the breach. Here we have the perfect body to step into the breach. That would be entirely consistent with what it is doing. That is the mood and spirit of these amendments. I hope very much that the Government take the issues on board because were we not to see results that responded to the spirit and meaning behind these amendments, we would have a body that was very suboptimal. I think the House would agree with that.

[Baroness Finlay of Llandaff (CB)]

My Lords, I thank the noble Lord, Lord Stevenson, for his very important comments in introducing these amendments. He has covered some issues that I was going to cover in relation to my amendment, which is next. I wonder whether he feels my amendment covers some of the things he is concerned about, because care leavers are just one group in vulnerable circumstances—we all know that—but there are other groups as well. I have a slight concern that once we start to put lots of different lists in the Bill, somebody will be left out. I will explain why our amendment is worded as it is and I am very grateful for the support from his Benches, but I raise that as a question.

[Lord Young of Cookham]

My Lords, in response to the comments of the noble Lord, Lord Stevenson, about the propulsion available to the co-pilot, it remains the same: the journey may be a little shorter and therefore the destination may be reached more quickly.

Amendments 9 and 10 tabled by the noble Lord, Lord Stevenson, would alter the strategic functional matters relating to financial education. I thank all those who have contributed to this debate for highlighting once again the important issue of financial education. We had a good debate on this issue in Committee and I believe we agreed on both sides that financial education is extremely important at all stages of life—a point made by the noble Baroness, Lady Kramer. A key role of the new body will be to improve people’s financial capability and help them make better financial decisions, and to identify any gaps that there may be at the moment in the provision of such advice and guidance.

The financial education element of the strategic function is targeting a specific area of need, which is to ensure that children and young people are supported at an early age on how to manage their finances, for example, by learning the benefits of budgeting and saving. More specifically, the new body will have a co-ordinating role to match funders with providers of financial education projects and initiatives aimed at children, and will ensure that these are targeted where evidence has shown them to be more effective. This falls within the wider strategic financial capability work of the body and should form part of the national strategy, which we expect it to deliver.

As I explained in Committee, the Money Advice Service has been undertaking that role. It is one aspect that respondents to the Government’s consultations have overwhelmingly agreed it is important for the new body to continue working on. MAS’s work under the financial capability strategy focuses specifically on improving people’s capability, which they need to make key decisions, such as those presented in this amendment. We expect the new body will carry forward and improve the work under the umbrella of the new SFGB. I stress that this does not mean that the new body will not be providing financial education for adults. As I have explained, this is a key role of the body in improving financial capability, as it is for MAS now. For example, MAS currently runs a pilot on adult numeracy with National Numeracy through the What Works Fund. Also, through the work with the Financial Advice Working Group, it is creating a simple portal for employers linking to the MAS website and exploring partnerships for helping employees with money management. Finally, through the financial capability strategy, MAS works with the National Association of Student Money Advisers to test and improve the model for financial education for younger adults. We expect the body to continue and build on work in this space.

Moving to the specific amendments, Amendment 9 would alter this function so that a strategy for the provision of financial education is extended to care leavers. I thank the noble Lord for raising this point. It was also an issue raised by the noble Earl, Lord Listowel, in Committee. As I highlighted to the noble Earl at that point, the Government agree and we expect the new body to consider further initiatives to support care leavers as well as other young people from marginalised backgrounds—for example, those leaving youth detention or those with learning difficulties.

As we heard from the noble Baroness, Lady Finlay, Amendment 11 refers to vulnerable people and I absolutely agree with her: care leavers are vulnerable people. I hope my noble friend will say a little more about how we plan to help vulnerable people, including care leavers, when we debate Amendment 11.

Amendment 10 would make provision specifically for adults contemplating difficult financial decisions, such as mortgages, pensions and vehicle finance plans. As I said in Committee in response to the amendment tabled by the noble Baroness, Lady Kramer, and the noble Lord, Lord Sharkey, this is the role of the SFGB as a whole as it delivers money and pension guidance and debt advice. Also, the strategic function under Clause 2(7)(a) already gives the body a specific responsibility to work to improve the,

“financial capability of members of the public”,

including in these areas. To give the new body a requirement to advise the Secretary of State on explicit issues, worthy as these may be, is unwise. The noble Lord, Lord Stevenson, said that one could either agree or disagree with the point I have just made. I happen to agree with it—he may disagree with it—but there are problems in focusing on specific issues. There are several topics that the body may wish to look into as part of its strategic function and choosing a few could risk limiting its ability to look more widely at the sector and have regard to emerging issues in the future. For those reasons, I hope the noble Lord will withdraw his amendment.

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Moved by

[Baroness Finlay of Llandaff]

11: Clause 2, page 2, line 32, at end insert—
“( ) access to financial services for people in vulnerable circumstances,”

[Baroness Finlay of Llandaff]

My Lords, I am grateful to those who have put their names to Amendment 11: my noble friends Lady Coussins and Lady Hollins, as well as the noble Lord, Lord McKenzie, who addressed these issues in Committee and has been trying to move things forward. I also thank the Minister for meeting me and my noble friend Lady Coussins, for giving so much of her time and paying so much attention to every detail of the arguments that we put to her in that meeting, and for making great efforts to address the points we were making.

I turn specifically to this amendment and the way it is worded. We have used the wording “people in vulnerable circumstances” because people may be permanently deemed vulnerable—such as people with learning difficulties, people who have a permanent speech disorder or those who have difficulty communicating. There are, however, an awful lot more people who have a fluctuating impairment of capacity, either through illness or medication. There are also people who have been coping really well but have something happen to them, such as an acquired brain injury. All find themselves in vulnerable circumstances. To comment again on care leavers’ situation, there is powerful, researched evidence that children who have had four or more adverse childhood experiences are extremely vulnerable to lots of other factors in life, but they, having been in care, are not the only children who are vulnerable. There are a whole lot who were not in care but have had similar adverse childhood experiences and then have a great deal of difficulty handling their adult life and independence, and in responding to things.

Another difficulty now being faced is the closure of some bank branches and the rise of internet banking. People who have a tremor, for example, need assistance, and they may then find that they do not have the privacy they want. The list could go on and on but, one way or another, we would end up including over half the population, to whom things can happen at different times. Everyone in this Chamber must have found that when they are acutely bereaved they are vulnerable for a time. Their thinking is impaired and they cannot cope with some of the decisions they make but they come out of it, and I do not think anyone would label any of your Lordships as having impaired capacity during this debate.

Therefore, our thinking was that improving access to and awareness of financial services for people who find themselves in vulnerable circumstances, whatever those might be, should run right through the core functions. A little like the lettering in Brighton rock, it should go right the way through.

I must declare an interest as chair of the National Mental Capacity Forum. I have been working with banks, building societies and the Equity Release Council, and some of them—I should like to single out the Nationwide Building Society—have done fantastically good work, but there is a need for the whole sector to be taken along. Laws send social messages too. Therefore, I hope the Government will be able to look favourably on the amendment, which is worded to create not a list but a whole philosophy compatible with other legislation, particularly the provisions of the Mental Capacity Act. I beg to move.

[Baroness Coussins (CB)]

My Lords, I have added my name to Amendment 11. I remind noble Lords of my interest as president of the Money Advice Trust, the charity that runs National Debtline and Business Debtline. I echo my noble friend’s thanks to the Minister for meeting us yesterday to discuss the intentions behind the amendment.

My noble friend has laid out the need to address access to financial services for people in vulnerable circumstances. It is also important to acknowledge the work that is already under way in this area—in particular since the FCA’s paper on vulnerability in 2015. Since then, the British Bankers’ Association’s Vulnerability Taskforce has produced a report challenging the industry to improve, and the issue of vulnerability has remained high on the agenda.

All that is of course very welcome but, as my noble friend indicated, the term “vulnerable people” does not necessarily mean the same as “people in vulnerable circumstances”. Very often in the past, “vulnerability” was used interchangeably with mental health issues, yet there is a growing recognition of the need for financial services and other organisations to consider a much wider range of vulnerable circumstances.

As an illustration of that need, the Money Advice Trust provides training for the sector in supporting customers in vulnerable circumstances, and demand has been growing significantly over recent years. The charity has now trained more than 11,000 staff working in more than 160 firms. Increasingly, this training covers areas way beyond mental health, such as supporting customers with addictions or a serious illness, those suffering a bereavement or redundancy, and people contemplating suicide, to give a few examples. Yet many people in vulnerable circumstances are still excluded from financial services and are unable to access the support they need.

The SFGB provides an ideal opportunity to increase the focus on vulnerability through its national strategy. As I said in Committee, the Department for Work and Pensions, as the sponsoring department, could also provide a very useful link between the body’s work and the broader financial inclusion policy agenda.

This amendment seeks to take the good work on vulnerability that is being done by the industry and the voluntary sector and give it an explicit focus on the face of the Bill. I hope that it will receive careful consideration by the Minister or that something very similar that captures the intention of the amendment but is perhaps better worded can be brought forward by the Government at Third Reading.

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I have listened to noble Lords but I want to review, because I do not believe in any event the wording is quite right, nor the way in which it has been placed in the Bill. The body already has an objective to prioritise people most in need. Let us take this issue away, and review and consider it further. On that basis, I very much hope the noble Baroness will feel able to withdraw her amendment.

[Baroness Finlay of Llandaff]

I am most grateful to the Minister, particularly for those final phrases in her speech, and to all noble Lords who have spoken and contributed to an extremely rich debate. It has become evident that this is not just about vulnerable people, but about everybody who can find themselves in a vulnerable circumstance. There should be no stigmatisation of any sort; this could happen to anybody.

The Bill seems to be a good one, aiming to look after the whole population. Of course, it needs to look after people in bad times as well as good. That is the purpose of the amendment: to have better public outcomes, not just when capability can be increased, but when it cannot be, with services then adapting to meet the needs of the people they are there for. That is what a community is all about.

We can go away and look at the wording again, to think about whether it can go somewhere else or be adjusted slightly in the Bill, then come back at Third Reading.

[Lord McKenzie of Luton]

I just want to press the point made by the noble Baroness about Third Reading. If we could come back to it at Third Reading, that would be good.

[Baroness Finlay of Llandaff]

Through being able to come back at Third Reading, we have the assurance that we can tailor the Bill to try to get it absolutely right and to meet all the needs that have been outlined during this rich debate. Because of that, I beg leave to withdraw the amendment.

Amendment 11 withdrawn.