Financial Services Bill

Gareth Davies Excerpts

Monday 26th April 2021 Commons Chamber

Finally, it would be nice if Opposition amendments were taken on board more often, or indeed at all, by this Government. There is so much that could be done in areas reserved to this Parliament, where the Scottish Parliament would also like to act but cannot do so. I hope very much that some day soon Scotland will not have to wait for a UK Treasury Minister to act, and that we will be able to do so ourselves, with the proper powers of an independent nation to protect our own people and to build a fairer, more inclusive, more prosperous nation.

[Gareth Davies (Grantham and Stamford) (Con)]

Mr Deputy Speaker, you will be pleased to know that I will keep my remarks incredibly focused and brief. They will be entirely on Lords amendment 8, which I am afraid I cannot support.

Let me first congratulate and thank the Economic Secretary for all his hard work in bringing the Bill through so eloquently and in such a detailed way. I thank him particularly for his remarks on Lords amendment 8, which I will re-emphasise for the House. He set out very clearly that there are 250,000 people with inactive lenders, of whom 120,000 are unable to switch. Of them, 70,000 are in arrears, which means that they are unable to meet the risk criteria of other lenders.

However, it is worth pointing out that the Government are taking action to help financially vulnerable people and people in financial difficulty with mortgages, for example through the breathing space scheme, which helps to enhance legal protection for borrowers, and the pre-action protocol, which essentially puts repossession at the end of the queue, as a last resort for borrowers.

The centrepiece of Lords amendment 8 is, of course, the cap on SVRs. I entirely agree with the Minister and many others in the market who suggest that that would be unfair to borrowers with active lenders, but most significantly, it would represent a significant and radical intervention in private markets. It would represent a serious risk to financial stability, as the Treasury and the Minister have outlined. Lenders’ ability to adjust SVRs according to market conditions is critical, to enable them to take a risk-based approach to market conditions. Taking that away would make those lenders more vulnerable to financial shocks, such as a future financial crisis, which none of us wants.

This is a significant issue. The Treasury has said that it does not support a cap on SVRs, as has the London School of Economics, as many speakers have already outlined. The right hon. Member for Wolverhampton South East (Mr McFadden) outlined that Martin Lewis backed the LSE report. Martin Lewis has also said that a cap on SVRs would be imperfect and a temporary “stopgap”. That is not a ringing endorsement. For the reasons I have outlined, I simply cannot support the amendment.