Financial Services and Markets Bill

Baroness Twycross Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, I support the general thrust of the amendments on access to cash and the availability of real banks, if I can put it that way. I take the point of the noble Baroness, Lady Noakes, that the future is digital and that our effort should be to incentivise the financial sector to make it easier for those people who, at the moment, lack the confidence to use digital methods. I accept that she is right, up to a point; we probably are moving to a cashless society. So far, however, the financial sector has shown itself to be rather backward in coming forward with innovative solutions for people who lack confidence.

Secondly, there is enough evidence around to suggest that, at the moment, enough people—millions of people—use cash. They often use cash as a way of budgeting at a very difficult time. I would be loath for us to take action that disenables them from doing so. One of the concerns about access to cash is not just that the number of machines is being reduced but that the amount of free access to cash is, I understand, also reducing. Some of this is to do with the way that fees are charged by the LINK facility. I will not put the noble Lord, Lord Hunt of Wirral, on the spot, but there are issues around the way in which that policy has developed over the past few years, as it seems to be putting pressure on some of the cash providers. This, again, needs to be looked at.

I was very struck by an article in the Guardian today about a 91 year-old who

“discovered that her pension and benefits payments had been stopped and her direct debits cancelled after a Barclays agent recorded that she had died and closed her account.”

I realise that hard cases cause bad law but her experience brought home to me many of the problems that are being faced. She

“informed Barclays that her husband had died. She asked for his name to be removed from their joint account and replaced with that of her daughter … who has third-party access to her account. Instead, she was marked as deceased and the account was closed. Her pension and benefit payments were returned to the Department for Work and Pensions and her direct debits were stopped. She discovered the mistake when she returned from a family Christmas to find her phone line and energy supply had been cut off and a sheaf of letters from companies and the council demanding payment.”

The article continues, as she then

“made two trips to her nearest Barclays branch and was told on both occasions by staff that she was recorded as dead. The bank refused to discuss the case with her daughter because her third-party authority had been revoked when the account was closed.”

This recalls the experience of my wife and I, who had power of attorney for our parents. Once they have died, you lose that power of attorney; it becomes very difficult to have any interaction with the bank at all, and the bank itself is often unsympathetic when you try to discuss this.

In Mrs Roper’s case, the account was eventually reopened and the payments restored after intervention by the Guardian. However, as the article states:

“Roper’s ordeal highlights the obstacles facing vulnerable customers who do not have access to online banking. A Barclays customer for 65 years, she is unable to cope with the automated menus on the customer service phone line and, since her local branch closed, she is forced to take two buses to the next town to withdraw money and manage her account. The only available appointment to request the account change was at a branch 23 miles away where staff did not know her. She brought the required documents, but the bank refused to proceed with the requested name change because she could not recall her little-used pin number. She was told her to make another appointment when she had remembered her pin.”


I am afraid that this is all too common. When we talk about encouraging people to use online facilities, I recall my mother in her last year or so. She was very frail. Even using phones with big numbers, not smartphones, became very difficult. With banks and other financial services, we know who the policy people are; they are often the same young people who work in government developing policy. I accept that the noble Baroness, Lady Noakes, is right about where we are going as technology moves on. However, we are talking about forgotten millions of people here. So far, because I do not see the financial sector responding, we need some safeguards in the Bill. Before Report, I hope that we can coalesce around one amendment that will really enable us to ensure that there are strong responsibilities on the regulator to encourage best practice here.

[Baroness Twycross (Lab)]

My Lords, I want to speak to my Amendments 185 and 188 in particular, as well as on the broader points made by other amendments in relation to access to cash and basic banking services. I declare an interest as London’s Deputy Mayor for Fire and Resilience and the chair of the London Resilience Forum, not least because the London City Resilience Strategy highlights the risk of moving to a cashless society.

First, Amendment 188 concerns the importance of cash to national resilience. It is of critical importance that the Government have due regard to what might happen in some crisis situations were we to become an entirely, or almost entirely, cashless society. Comment has been made on the march towards a cashless society in Scandinavian countries, including by the noble Viscount, Lord Trenchard, but we should also note that these countries have not only greater equality and lower financial exclusion than the UK but, in formal government guidance to their populations on preparedness, they recommend that their citizens have some cash for use in an emergency.

The Norwegian Government’s English language public information leaflet on personal preparedness says:

“Most of us are completely dependent on electricity in our everyday lives: for heating, light, cooking, hot water and running electrical appliances and devices. Storms, natural disasters, sabotage, technical problems, terrorism or acts of war can result in many people’s electricity or water supply being cut off.”


The digital world in which we live, which is reliant on electricity, creates huge risks as well as opportunities. The world is in many ways less resilient to shock than it was previously as a result. You only have to look to the recent cyber incident that Royal Mail experienced, with weeks of not being able to send international post, to understand the real risks of a world in which individuals, companies, sectors and countries become overly reliant on digital finance and digital infrastructure.

On a national basis, everything from a major power outage to a rota power outage—your Lordships will know that local resilience forums were asked to plan for one this winter so this is not a hypothetical situation—whether this is through shortages, hostile cyberattacks or a major storm, could restrict the ability of individuals, businesses and government to function. I agree with the noble Lord, Lord Holmes, that access to cash should be viewed as part of the national critical infrastructure.

The scenarios in which an overreliance on digital banking, with an absence of cash as a back-up, becomes an additional complication or risk in an emergency situation are not far-fetched. This is a genuine threat to our country’s resilience and to our national security in an unstable world. I therefore ask Ministers to consider including this amendment and would suggest that, as a minimum, the ongoing work that the Government are undertaking on the national risk register considers what additional risks might emerge in relation to emergency situations in which cash was no longer available.

There is limited reference to this issue online. In my attempt to get more extensive examples or comments to back up my points, I did not find much of note to cite relating to the UK. This actually made me more concerned, not less. The reality is that it is not far-fetched to have a scenario in which we could lose access to digital finance or payments systems for a number of days—or weeks—on a national, regional or sub-regional basis. The reason cash has lasted so long is that it is, in essence, resilient. That is not the only reason for keeping cash but we need, as a country, to avoid sleepwalking into losing the resilience that it can provide. If you spoke to people working on resilience in Sweden, for example, I think they would also note that it presents additional problems. This is not about preserving history, as the noble Baroness, Lady Noakes, suggests, but about preserving our resilience.

Amendment 185 in my name, which is on the regional experience of cash provision, is intended to highlight the need for us to understand and plan, through the FCA, for cash provision—not just on average, or on the whole, but in relation to whether provision has a regional and potentially sub-regional imbalance. This would enable any regional disproportionality that exists to be addressed. I am particularly concerned that we have large areas, both rural and within cities, that no longer have banks. I know, for example, that the entire constituency of Bradford South no longer has a bank. Like others, I am particularly concerned about the risks of there being a lack of cash and basic banking services for the most vulnerable in society. Others have already spoken on this point and given detailed statistics illustrating it, so I will not dwell on it.

In conclusion, I commend those noble Lords who have tabled specific amendments covering free access to cash and access to basic banking services. It is not a coincidence that Amendment 182 has cross-party sponsors and I commend my noble friend Lord Tunnicliffe, the noble Lord, Lord Naseby, and the noble Baronesses, Lady Tyler and Lady Altmann, for their work on it. I also commend those in the other place, particularly the honourable Member for Mitcham and Morden, who have pushed for this matter to be addressed. Quite simply, free access to cash and basic banking services must be guaranteed. At the heart of British personal banking lies free access to your own money. It is outrageous that if you are poor, you are more likely to have to rely on charged-for cash machines. This legislation provides an opportunity to address the issue, as well as ensuring that we safeguard our country’s resilience.