Financial Services and Markets Bill (Second sitting)

Debate between Emma Hardy and Craig Tracey

Committee stage
Wednesday 19th October 2022 Public Bill Committees

[Craig Tracey]

Q I have one quick follow-up. With that in mind, is the FCA the right one to have a remit for financial inclusion? If not, who should?

Martin Coppack: Importantly, when asking the FCA to do social policy, it would not allow it. What it is about is closing that complete spiral. Seventy-odd organisations have signed our call, and some firms. We are trying to close that loop so that we can have conversations about the most difficult things affecting the poorest of your constituents. That is all we are trying to do, and what I would urge you to support.

[Emma Hardy]

Q Thank you both for your work in this area. Martin, you might have heard Sheldon from the FCA earlier trying to reassure us all that we do not need to have regard to financial inclusion, and that it is all fine and there is nothing to see here. Will you elaborate? If the FCA had a “have regard” to financial inclusion, what difference would it make to the lives of people facing financial exclusion? Can you provide any examples of the interventions that the FCA could make if it had that “have regard”? What difference would it make? The FCA is saying, “It’s all fine, and we do something anyway”, and it pointed to the consumer markets—that was its answer.

Martin Coppack: Gosh, there was a bit there. Remind me if I do not get everything. First, the FCA will talk about the consumer duty and its vulnerability guidance. Neither of those touches anything to do with income. Vulnerability touches lots of things, like losing a partner or disabilities, which is great, but looking at income does not touch any of it. I have had numerous conversations with the FCA, and it is not supportive of this, but it recognises the issue, although it has not come up with an alternative.

On examples of how this would have worked well in the past—actually, I have a current one. How long has Natalie been trying to get some action here, on access to cash, before the infrastructure absolutely wilts away? It is a race against time. I was in the FCA 10 years ago, or whatever, and I saw all the letters going between Departments and the FCA to say, “Let’s not touch that. It is not in our remit.” That is a live one right now.

Past examples: the loyalty premium insurance everyone knew was an issue. It took Citizens Advice getting all its resources together to do a super-complaint to get any further on the loyalty premium in insurance. Access to basic bank accounts—Sian Williams at Toynbee Hall was going at this for years before we got any further. Those are the types of intervention that would be allowed.

On the difference at the ground level, I could go through a few more parliamentary constituencies. For example, tackling the insurance poverty premium would make a huge difference of £500 million to your constituents, James; it would make a difference of one million three hundred for your constituents, Emma. I could go on.

One other quick thing is that, when we talk to people in the community, they do not have a clue why the market is why it is. People like me can say, “Cost to serve—it’s a rational way the market is working.” But if you ring up and say, “I want car insurance,” they say, “We don’t serve you—it’s your postcode.” I have had people say, “If I cross the road in Glasgow, my life expectancy goes down by this much. The same applies in terms of my insurance going up.” People say they are lying on their insurance forms by putting different postcodes on, because they need their car because they are disabled. This is how consumers react to a system that does not work for them.

Financial Services and Markets Bill (First sitting)

Debate between Emma Hardy and Craig Tracey

Committee stage
Wednesday 19th October 2022 Public Bill Committees

[Craig Tracey]

Q I have a final question. How much of a barrier to investment is the current regulatory framework? We have heard about the time that it takes to get regulated, and the insurance and financial services all-party parliamentary group has had reports on the cost—that it is up to 14 times more expensive to be regulated in the UK. How much of a barrier do your members see that as? Will the Bill help to address it?

Karen Northey: I think that is a barrier. Previous conversations have covered authorisations of individuals and firms. If there is something unique in our sector, it is that our products also need to be authorised—the funds themselves need to be authorised. I mentioned the examples of Ireland and Luxemburg as key competitors in fund domicile: in Ireland it is possible to have approval for a fund within 24 hours. The FCA target is a month, but that does not always happen. There are definitely instances where in-depth review is important—we want to make sure that funds are meeting obligations—but sometimes they are very similar to previously authorised funds, run by managers who have a long history and so on. Definitely when it comes to fund domiciles it is something that is considered as important.

I know that the Bill focuses a lot on bringing EU legislation back, which is absolutely essential in terms of targeting certain areas so they are more fit for purpose for the UK market, but there are other areas of reform that are more homegrown that have led to challenges for our members in terms of our international competitiveness—the consumer duty was mentioned, for example, and there is the financial services compensation scheme and a number of others. It is not the only factor in making a decision, but it is definitely a factor.

Charlotte Clark: Similarly, I cannot recall a new insurance company being set up in this country—certainly not in the last 10 or 15 years. They are being set up in Gibraltar, Bermuda and other places where there is equivalent regulation. There is something about how we attract it, do it quicker and ensure that people feel that this is a good place to do business.

I will make a broader point with regard to investment and slightly contradict something I said previously about net zero. One of the things we talk about is that it is harder to invest in a wind farm than it is in coalmines. Those sorts of regulatory barriers need to be changed so that we are investing in the right things for the UK economy, particularly when it comes to net zero.

[Emma Hardy]

Q Karen, I wonder whether you heard the back and forth between me and Sheldon on financial inclusion. What are your thoughts about introducing a “have regard” provision for the FCA on financial inclusion? What else could be done through the Bill to strengthen financial inclusion?

Karen Northey: Financial inclusion is probably not relevant to our industry, in terms of access to bank accounts, but financial wellbeing is critical to our industry, in terms of how money is invested for the long term—particularly later in life—for individual investors. Three quarters of households use an investment manager through their pensions, for example, so it is about making sure they get the most out of their investments.

We have suggested that you address as quickly as possible the advice-guidance boundary. That might sound quite technical, but there are a large number of individuals who simply do not get financial advice because of the way the regulations work at the moment. We are encouraged to hear that the FCA fairly recently announced a comprehensive review of the advice-guidance boundary, but there are definitely things that can and should be done around enabling more people to get help, whether that be more bespoke guidance—there is lots of technology and innovation that will help without giving regulated advice, which absolutely should be the bedrock of complicated financial planning—or simplified advice. In terms of financial wellbeing, that is something we would like to see.

Department for Education

Debate between Emma Hardy and Craig Tracey

Tuesday 3rd July 2018 Commons Chamber

[Craig Tracey (North Warwickshire) (Con)]

Regardless of our background, upbringing, gender or religion, we should all have the same opportunities. Hard work and ambition should be the defining factors in social mobility, so I am encouraged by the Government’s commitment to a world-class education for everyone and by the introduction of a new national funding formula that gives every local authority more money for every pupil in every school.

Of course, increased education spending is only part of the story. There are now 1.9 million more children being taught in schools rated good or outstanding than in 2010. That is helping to ensure that every child will receive a good education and the opportunity to fulfil their potential.

[Emma Hardy]

Has the hon. Gentleman read the recent report that looked into the issue of there being more children in good and outstanding schools? It said that the number of children in such schools had increased because the number of children had increased. Actually, a high number of such schools have not seen an inspection since 2010. Does he agree that the figure could be at least a little misleading?

[Craig Tracey]

I have not seen the report that the hon. Lady has mentioned, but in my own constituency standards and exam results have been improving. From my own personal experience, that is happening on the ground. I will come back to that in a minute.

What is happening is helping ensure that every child will receive a good education and the opportunity to fulfil their potential. Locally in North Warwickshire and Bedworth there has been a significant improvement in school ratings. In fact, according to figures released in December, our local community was one of the best improved areas for pupils attending good or outstanding schools since 2010—an increase of nearly 8,000 children. Standards in our schools continue to rise because of the hard work of teachers, combined with the changes the Conservatives have made to the curriculum—something I have seen first-hand during my regular visits to local schools. That is a record that Conservatives, who in government have both protected and invested in education funding, can be proud of.

We are in a strong position, but there is one area that I would like to focus on and deserves our special attention: maintained nursery schools. Maintained nursery schools were set up in the 1940s to improve social mobility, with 64% based in areas of social deprivation. They also provide education and care for a large proportion of nursery aged children with special educational needs, which is a legal obligation not catered for by private providers. The issue they face is that in 2016, when the early years funding changed to universal base rate funding, they saw a dramatic reduction in the money they receive. The Department for Education was quick to act and agreed to provide supplementary funding of £55 million to top up their budgets until the financial year 2019-20. Critically, this date is nearing and maintained nursery schools need certainty as soon as possible, so they can plan their futures. They provide a unique role in the early years sector. I know the Under-Secretary of State for Education, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), takes a keen interest in this issue and the Government are committed to holding a public consultation later in the year. That is very welcome, but we must not underestimate the impact of these schools in our constituencies.

I have had the privilege of working with Amanda King, the inspirational headteacher of two maintained nursery schools in my constituency, Bedworth Heath and Atherstone. Some 20% of the children at her Bedworth Heath Nursery School are vulnerable children. From September, it will have eight children with heightened medical and special educational needs and disability. Despite those challenges, both schools are Ofsted rated outstanding across the board. As Amanda points out, it is not just about the service they offer to the children; the wider benefits they offer to the community are unique. If they were not around, there would be a gap in provision. They offer high-quality childcare, which is a key factor in the social mobility of the mothers. The schools even lead by example on this, with over a third of her staff being former parents of children who went to her nursery.

Unfortunately, the universal base rate funding is not enough to enable them to cater for these children and while they also receive an inclusion grant, it does not cover the full costs. To illustrate the point, the inclusion grant is £100, but one-to-one support costs Amanda’s schools £160 a week. Having eight children with high- level special needs, they will be running a deficit of £480 a week on this one issue alone. She is understandably frustrated with the current funding situation, saying that they want to offer help and support across the wider sector but cannot plan to do this if they are at risk of having to close their doors at the end of the next financial year.

There is a clear and demonstrable case to provide the financial certainty that these schools need. They are an asset to the communities they serve. If the funding is not provided, it will still need to be found elsewhere so that the provision can be made to ensure that children, particularly from areas of social deprivation or with special educational needs, can continue to receive the best possible start to their education journey. When a clear solution already exists to these issues, it would seem prudent to give it all of the support it needs, but the clock is ticking. I therefore urge Minsters to look carefully and quickly at what can be done to ensure excellent headteachers like Amanda and her many colleagues around the country are able to fully concentrate their efforts in providing the high-quality education that benefits so many of our constituents, while delivering on the key Conservative principle of social mobility.