Financial Services

Baroness Penn Excerpts

Wednesday 11th January 2023 Lords Chamber

[Lord Holmes of Richmond]

To ask His Majesty’s Government what steps they are taking to ensure that all financial services are accessible and inclusive, including ATMs and point of sale terminals.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, the Government work closely with regulators, industry and consumer groups to promote financial inclusion. We are currently legislating to protect access to cash and many firms offer services to make everyday banking and payment interfaces, including ATMs and point-of-sale terminals, more accessible for consumers. Importantly, all service providers, including banks and building societies, are bound under the Equality Act 2010 to make reasonable adjustments where necessary in the way they deliver their services.

[Lord Holmes of Richmond (Con)]

My Lords, if we are to ensure financial inclusion, we need not just to have such financial services and products but to ensure that those services and products are accessible. Does my noble friend agree that the worrying rise in inaccessible point-of-sale terminals and card payment machines—for example, accessible keyboards being replaced with inaccessible flat screens—marks three things: a prima facie breach of equalities legislation, a complete failure of inclusion by design, and just bad business?

[Baroness Penn (Con)]

My noble friend is absolutely right that it is really important that innovation aid inclusion, rather than hinder it. I was really pleased to hear about the work the Royal National Institute of Blind People has done with manufacturers to create an accessible solution for card payments, and that these devices are starting to appear in some shops. That is excellent work that we would like to see replicated to ensure that the aims he rightly referred to are met.

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Baroness will be aware from our debate yesterday of the real concern about loss of banking facilities for people with disadvantages, and that there is a great risk that many currently free cash machines are going to be converted, so that people will have to pay commission on the cash they take out. Will she look very carefully at last night’s debate and come back with amendments to safeguard financial inclusion?

[Baroness Penn (Con)]

I will absolutely be looking very carefully at all the details of yesterday’s debate. I do not think it necessary to amend the Bill to achieve what the noble Lord talks about. On face-to-face services and bank branch closures, there is already FCA regulation on banks seeking to close branches. That guidance has recently been strengthened and is very clear about the expectations for the provision of alternative services; also, the impact of branch closures on customers must be considered very carefully.

[Baroness Tyler of Enfield (LD)]

My Lords, recent research shows that blind and partially sighted people are twice as likely to be digitally excluded—and, by extension, financially excluded—as the general public. Does the Minister agree that the Financial Services and Markets Bill, which we discussed only last night, must give the FCA a “have regard to financial inclusion” statutory duty to ensure that financial inclusion is protected and advanced for blind and partially sighted people and other vulnerable groups?

[Baroness Penn (Con)]

My Lords, I recognise the strong interest in this area. As we debated last night, the previous Financial Services and Markets Act put an obligation on the FCA to look at it. It has brought forward its new consumer duty and believes that that fulfils the same function. I am sure that we will discuss this further in Committee.

[Lord Kirkhope of Harrogate (Con)]

My Lords, I declare a partial interest in that a member of my family is involved in designing, constructing and introducing ATMs and other retail technology. Does my noble friend think that enough is being done on the relationship and connection between organisations that represent those with disabilities, the Government and the manufacturers and designers of this equipment?

[Baroness Penn (Con)]

I would certainly be interested to hear what more could be done in that area. On ensuring that everyday banking is accessible to customers, LINK, for example, publishes on its cash locator information on ATMs with audio assistance and those that are wheelchair-accessible, so that consumers are aware of what locations are suitable for them. We are always interested to hear about what further work we can do to promote financial inclusion.

[Baroness Bull (CB)]

My Lords, the Minister mentioned the FCA consumer duty. As I understand it, that duty and the consumer vulnerability guidance deal primarily with existing customers and do not help with the issue of the poverty premium, which excludes vulnerable people and those with the least access to resources from financial products and services. Can she say how that new consumer duty will address the issue mentioned by the noble Baroness, Lady Tyler, because I do not believe they are the same thing?

--- Later in debate ---

[Baroness Penn (Con)]

The noble Baroness is right to mention the poverty premium. It can take different forms; it may be financial exclusion or being charged more for particular services. The Government progress their work on this area through the Financial Inclusion Policy Forum. For example, we are working with Fair4All Finance, which was set up using funding from dormant assets and seeks to provide more access to fair, affordable and appropriate financial products and services. It has an affordable credit scale-up challenge that seeks to address this area.

[Baroness Hoey (Non-Afl)]

Does the Minister share my concern at the increasing number of shops refusing to take cash? Obviously, they have the right to make that decision, but does she share my concern at the difficulty this poses for many people, particularly the elderly and vulnerable, who do not have bank accounts?

[Baroness Penn (Con)]

We absolutely recognise the importance of cash to the people the noble Baroness mentions. As she says, it is for shops and other service providers to determine how they accept payments, but we are legislating to protect access to cash through the Financial Services and Markets Bill. That should help those shops and service providers which wish to continue to accept cash to do so, because we are focusing on this from both a consumer and a wholesale perspective.

[Lord Sikka (Lab)]

My Lords, if I understood the Minister correctly, she said that the consultation, or the rules, on bank branch closures are being strengthened. May I ask her to consider three facts? First, there is absolutely no consultation between banks and customers before a branch is closed. Secondly, banks do not publish details of their financial calculations to show whether a branch should be closed or not. Thirdly, people do not have the opportunity to object and vote against a bank’s decision. In light of that, what is any guidance worth?

[Baroness Penn (Con)]

My Lords, what I actually said is that the FCA guidance on bank branch closures has recently been strengthened. I do not recognise the picture the noble Lord paints. Firms are expected carefully to consider the impact of planned closure on their customers’ everyday banking and cash access needs and to consider alternative arrangements. The strengthened FCA guidance has specifically looked at enhancing protections for consumers who rely on those branch services. For instance, there are examples of banks placing people in those branches to ensure that they can help their customers to access banking through digital means such as mobile or online banking. There is also the rollout of Post Office banking hubs to provide more in-person services to customers.

[Baroness McIntosh of Pickering (Con)]

What consideration have the Government given to the ability of residents in rural areas to continue to draw cash from ATM machines, and to the security implications of rural businesses not being able to bank their cash at peak times?

--- Later in debate ---

[Baroness Penn (Con)]

The access-to-cash provisions in the Bill will require the FCA to consider access to cash at both a local and national level, so it will take geographic factors into account. That is also taken into account through LINK’s maintenance of the ATM network, which considers how far people might have to travel to access cash and what is reasonable.

[Lord Tunnicliffe (Lab)]

My Lords, is the Minister claiming that progress on this matter is rapid enough? It seems to me that the general view in the House today is that it is not. If she is saying that the legislation is sufficient, surely, the implication is that the regulator is not doing its job well enough.

[Baroness Penn (Con)]

My Lords, there is always more to do. For example, I referred to the rollout of Post Office banking hubs. They may have been slower than expected to get off the ground, but just recently we have seen a large number of new hubs announced. That is an example of improvement in these areas. As I have referred to, we think we need more legislation, so we have measures in the Bill on access to cash to further strengthen that.