Financial Services and Markets Bill

Baroness Lawlor Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I enthusiastically support Amendment 186. I thought that the noble Baroness, Lady Tyler of Enfield, spelled out extremely articulately the importance of banking hubs and how that name could often be prosecuted for mis-selling. Even banks themselves, in terms of the service that they offer when you go into the few that are still open, can be accused of having only the minimum service required.

The noble Lord, Lord Hunt of Kings Heath, told a heartbreaking story about a 91 year-old but you do not have to be 91 and have a heartbreaking story. Things can just go wrong; your card can stop working or whatever. When you try to solve it on your phone and it does not work, you then go into the bank and, to be honest, you are treated as though you are wasting the bank’s time and as though you have done something wrong. The staff often cannot solve the problem and ask, “Why don’t you solve it online or on your phone?” The answer is that I would have done so if I could have done. In other words, I do not think that it is necessarily a special needs problem, as the noble Lord just said. I think it can happen to anyone. Sometimes, you need human intervention to sort out your banking.

I am also interested in supporting those amendments that would allow access to cash, including Amendments 180 and 181 in the name of the noble Lord, Lord Tunnicliffe. I especially like Amendment 189 from the noble Lord, Lord Holmes of Richmond, and its attempt to make cash critical national infrastructure in the UK; I also support Amendment 189A, which is headed “Access to physical banking services”.

I suppose I am concerned about noting that the importance of cash relates not just to those who struggle with their phones or other technology. This discussion sometimes implies that some of us are just Luddites who cannot cope or do not want to embrace the full excitement of new technology and digital futures. I want to emphasise that I can see the advantages of a cashless society. Mainstream cashless transactions carry certain information about payment participants, what was purchased and when, which can be a huge barrier to money laundering and tax avoidance. That is genuinely important but, for individuals as consumers, it can also mean—this may be slightly different to what others have emphasised—that it helps people with budgeting because they have electronic receipts and can see both what is going in and what is going out. I am rather enthusiastic about those technological steps forward; I do not in any way want to hold back the march of progress, in the way that some have implied.

However, precisely because cashless transactions mean that information about payment participants is available to financial institutions and banks in a different kind of way, they can also give those organisations huge surveillance capability and invasive powers in ways that we did not see so much in the past. It is then not about you taking cash out but about everything having to be recorded. This means that people are not able to do the things you could with discretion. It should be noted—this is not entirely being paranoid—that, in China, financial surveillance is used to censor and restrict people’s freedom to express opinions against the state.

Noble Lords might think that that would never happen in a democracy but, in a later amendment in my name—when I say later, I mean if it ever arrives; it is Amendment 241B, should anyone like to note that, because I do not suppose that anyone will be here to listen to my speech on it—I was inspired by payment processing in fintech companies, such as PayPal, and the move towards everything being cashless, with a cashless society and everything being digitised. This has meant that PayPal, for example, can close down accounts on the basis of politics; in fact, it has done so, so I am not just being paranoid.

There also tends to be a casual assumption that those who want to keep their financial transactions private—that is, by using cash from time to time—might be up to something dodgy, as though the only reason someone might want to be free to choose to use cash is if they are involved in embezzlement or tax fraud. Today, it has been much friendlier than that; people just assume that you are technologically incompetent and old-fashioned, so cannot keep up. We just have to be a bit careful about this. I have also noticed a trend where financial services are judging how individuals are making their purchasing decisions—judging their use of money in a way that they may not have done if were not quite so detailed.

Recently, I was interested that HSBC—my bank—was involved in a report that condemned people’s decisions about how much they spent on gambling and was backing affordability checks. I know that I disagree with some noble Lords in the Room on gambling—I can already see them—as I think that is a legal leisure activity and that you should be able to do what you want. The idea that the bank is saying that it has customers who spend too much on gambling, a perfectly legal leisure activity, and then gives a breakdown of them, indicates that rather than being a dispassionate financial service it is getting involved in things in a way that it perhaps should not. I have never gambled, but my bank could well send me a note about how much I am spending in TK Maxx, saying that has all gone a bit mad.

When we had cash, we took the money out, we spent it on what we wanted and nobody could see. A cashless society creates a slightly different situation. Amendment 186 on accessibility and Amendment 184 on levels of cash acceptance, along with the whole issue of digital exclusion and financial inclusion, are very important but do not quite capture some of the broader political trends associated with this issue.

I am also very sympathetic to the notion of the noble Baroness, Lady Noakes. On the one hand, cash is not a human right—I do not want to get stuck on that, as I am never keen on regulations lasting for ever; a time-limited sunset clause is a good idea—but I am anxious that we do not forget the political trends surrounding this by simply treating it as a technical issue.

[Baroness Lawlor (Con)]

My Lords, if I may come in briefly, I am very sympathetic to the aims of noble Lords who wish to see cash access and banking services available to those who need them and do not use or rely on digital. However, I agree with the aims of the Bill: international competitiveness and growth. I do not think that this Bill’s powers regarding the financial markets and services sector should be used in a blanket way to impose an obligation on service providers to provide a service whose use, by all accounts and evidence, is on the decline.

Not only do I support the two amendments from my noble friend Lady Noakes, but I think we should pay attention to the overall aims for the regulators in this Bill, which are international competitiveness and growth. I urge the Minister to focus on the real problem of access to cash and banking services for many people, and, where there is a problem or gap, to focus the efforts and use the powers of government on trying to deal with the declining number of users in our society—albeit a real group—rather than use the law to impose obligations in a blanket way on the sector, contrary to the aims of competitiveness and growth. As noble Lords have explained, such a move could undermine the competitiveness of the banking sector.

[Baroness Bennett of Manor Castle (GP)]

The noble Baroness appeared to be suggesting that the provision of services, including the cost, should be done by the Government and that the private sector should collect the profits. Could she clarify whether she was saying that?

[Baroness Lawlor (Con)]

I thank the noble Baroness for her intervention. No, I was saying that, when we use the law, we should be very careful not to impose the costs on providers if the aim of the law is to encourage competition. There are reasonable aims which are agreed to by the whole of society. It is a reasonable aim for society to require and want cash access. My heart agreed with the noble Baroness, Lady Tyler, as she powerfully moved her amendment, but we should draw a line between a blanket restriction on providers of these services and finding how government can help and encourage other providers of services to do it. I was just talking to other noble Lords in the Lobby about this. I know of voluntary groups, market groups and social providers which are out there helping such groups and finding ingenious solutions to meet the gap, where there is one.

[Lord Hunt of Kings Heath (Lab)]

My Lords, surely we have a situation in which the market is failing. In essence, the banks are not interested because they take the same view as that of the noble Baroness, Lady Noakes: that this part of the market is dying. They do not want to be involved because they want to be in a dynamic, new market. Faced with that and the 7 million people who use cash each year—in the current cost of living crisis that many people face, cash is used as a budgetary tool—what can we do if the market is clearly not providing? From our point of view, legislation is the only lever we have because none of the regulators seems that interested. Government departments are not; they are engaged in removing cash as much as possible. What is the alternative?

[Baroness Lawlor (Con)]

I thank the noble Lord for his intervention. I do not have an answer—I am sorry to disappoint the noble Lord—but this Bill is not the place for that. Its aims and purposes are to make the UK sector more nimble and competitive internationally so that it can move ahead in a post-Brexit world and we can all benefit from a successful financial sector. Putting caveats, restrictions and obligations on a sector can add costs to customers, consumers and all who use these services. However, I think that that is a good aim and is good to do. We should have a special committee to see how we can encourage use, short of using the law as a big stick on one sector of providers. There are many ways that have opened up in the market that are already providing use, which I can discuss later.

[Lord Tunnicliffe (Lab)]

My Lords, this is a key group for the Labour Party politically; it contains four of our amendments. Amendment 180 would require His Majesty’s Treasury and the FCA to publish a review of the need for

“access to essential in-person banking services”

and to ensure

“a minimum level of access”

to them.

Amendment 181 would require HMT to

“publish a policy statement setting out its policies in relation to the provision of essential in-person banking services, including … support for online banking, and maximum distances people can expect to travel to access services.”

I would be interested to know the Minister’s view on the reasonable distance for an elderly or disabled customer to have to travel to speak to someone from their bank.

Amendment 182 is perhaps the most important. It would compel HMT to

“guarantee a minimum level of access to free of charge cash access”.

Amendment 184 would require the FCA to

“monitor and report on levels of cash acceptance across the UK.”

I set out the crucial importance of free access to cash at Second Reading so I will not do so at length a second time; well, that is what it says here. Nobody has more interest in being speedy than me, or perhaps the Minister, because we have to be here for every minute of this Committee. We are almost in our 27th hour but this group is different from anything else that we have discussed. The rest of it—I cannot think of a polite way of putting it—is about activity that takes place for people like us. Quite a number of people work in the finance industry; we are looking at the nuances of it and how politicians should be involved.

However, the issue of cash is about our society. It is about the poorest and least competent people in our society. Technology has been a substantial disruptor. It is a disruptor that particularly applies to finance. It has allowed financial transactions to become extraordinarily efficient and has created a whole new customer base of people who are comfortable with technology. They have access to a whole new marketplace. We know that the dynamics of that have probably been benign for society.

However, the other problem is that it has created a divide in our society. I ran an organisation that used to have a lot of cash; I am all too familiar with the tremendous impact of approaching a cashless society. In all the knowledge in the world, the last bits are the most expensive bits. Yes, the cost of transactions goes up and so on and so forth, but we cannot afford to create the divide in our society that is emerging. We must support all parts of our society seriously. We must recognise that, in their lives, people sometimes need all banking services. We must recognise that some people simply cannot envisage how to budget without physically seeing it in separate pots. It is clearly a natural reaction if you are running out of money. You can see it there and have confidence because you know that, if you go into the grey world of accounts, banks, overdrafts, loans and things like that, all sorts of horrible things happen. For that group in society—it is probably 10% of our society so it is a substantial number of people—we must find a way of maintaining the public service. We must achieve a minimum service.

The noble Lord, Lord Blackwell, said what all providers of service say: if you are not ultra-efficient, you load the inefficiency costs on to other customers. It so happens that being ultra-efficient does not do much harm to your profit line either. Big businesses such as banks pursue the maximisation of shareholder value. It is in the law. They are supposed to do it, for Christ’s sake. We should not be surprised when they do but I rarely see them turning into charities. We have got to find ways. We do not have to keep all the branches open; even I can work that out. We have to be much more inventive in how we service this need, which is still large, but the way we must do that is by creating duties on the purveyors of financial services as well as rights and constraints.

It is proper for the law to create duties to look after the poorer members of our society. That is why so many people have said that it is important for a variety of needs—resilience and so on—that we maintain it. The banks must play their part. They have enjoyed massive exploitation—I do not use that in a pejorative sense—of information technology, probably more so than any other section of our society. They must recognise that there has to be a cross-subsidy in this situation because we must restore financial equity to all our society.