Oral Answers to Questions

Gareth Thomas Excerpts

Tuesday 9th April 2019 Commons Chamber

[John Glen]

I am grateful to my hon. Friend for that question and for his work as chair of the all-party parliamentary group on financial technology over the last four years. The regulator is the UK’s leading authority for interchange fee regulation, as he knows, and it is conducting a review into the fees that businesses face when accepting card payments. I acknowledge his concern, and we are open to hearing views on this issue, and on digital payments more broadly, as part of our call for evidence.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Can the Minister think of one independent trade expert who thinks FinTech in the UK will do better once Britain has left the European Union?

[John Glen]

As the hon. Gentleman knows, it is the Government’s policy to have an orderly exit from the EU. However, we know that FinTech has proved to be very resilient in all circumstances. We had record investment of £15 billion last year. That is testimony to the creative power of that industry, working in the financial services sector in the City.

Oral Answers to Questions

Gareth Thomas Excerpts

Tuesday 5th March 2019 Commons Chamber

[John Glen]

I can confirm that the national living wage will rise again this year, to £8.21. I can also tell my hon. Friend that later this year the Low Pay Commission will be set a new remit for beyond 2020. We want to be ambitious, with the ultimate objective of ending low pay in the UK while protecting employment for lower-paid workers.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I suspect the Minister knows that it will be more difficult to increase jobs in services businesses if we replace single market membership with a free trade agreement. Will he set out for the House what estimate he has made of the scale of the difficulty, particularly that facing financial services businesses that want to increase jobs in the current Brexit situation?

[John Glen]

Financial services are well protected and ready to engage on arrangements for beyond the implementation period, but the Government are not complacent in respect of the whole economy. We have made a series of interventions through our productivity fund to meet the challenges of the next generation.

Sport in the UK

Gareth Thomas Excerpts

Monday 4th February 2019 Commons Chamber

[Mims Davies]

My hon. Friend tempts me on that point—he knows it is very tempting and I have recently been hoping to visit his constituency—but that is not fully down to me. However, I have made it very clear that participation, particularly of women, and broadcasting opportunities are absolutely vital, so this is on my radar.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Does the Minister think that in the 21st century it is a scandal that only 10% of television sport coverage is dedicated to women’s sport? If she does share that view, what will she and the Secretary of State do to get Ofcom to take action against the free-to-air broadcasters on this issue?

[Mims Davies]

I spoke to the Rugby Football Union just this afternoon, praising it for its women’s Six Nations opportunities and for making sure that there is a chance for women to be seen doing that sport. We also talked about the events list. If we want to inspire people, it is absolutely right that we get chance to see them on the telly or indeed that we can see them play and take part in our local communities. The Secretary of State is sitting next to me and we are very keen—he has had meetings with broadcasters and I have some coming up—that the elite are seen on our TVs and ultimately, that people feel that they can aspire to be part of sport.

--- Later in debate ---

[Dr Rosena Allin-Khan (Tooting) (Lab)]

I would like to begin by sending all our best wishes to Cardiff City FC and its fans, who sang continuously throughout the match against Bournemouth on Saturday, in memory of Emiliano Sala. There is no doubt that he will for ever remain in their thoughts.

With your permission, Mr Deputy Speaker, I would like to put on record my disgust at the situation of Hakeem al-Araibi, the footballer who fled Bahrain and appeared in court today in Thailand, facing forced extradition. The Opposition strongly urge the Government to lean on Thailand and Bahrain with maximum force to drop those charges. The United Kingdom has a proud history of assisting those fleeing political persecution, and we should not stay silent on this matter.

Supporters should always be at the heart of sport. Sport should be run in the interest of fans, not the privileged few, which is what I want to focus our debate on. In a world of ever-growing commercialisation, fans are rarely part of the decision-making process; instead, money talks. Nowhere is that more apparent than in our national game—football. The premier league has undergone a transformation in the past three decades, and without a doubt is now the best sporting league in the world, admired around the globe. Wherever we travel, whether Hollywood Boulevard or refugee camps in Bangladesh where I have worked, premier league football shirts are commonplace. It is incredibly moving to know that the UK football scene has such an incredible fan base, which we must nurture.

Fans are desperate for small changes: they want a better atmosphere in stadiums; they do not want to be at the mercy of billion-pound TV deals; they want a say in how their club is run; and they do not want their children to be bombarded with betting adverts. Those form our pledges for supporters, because we believe that fans must have a greater say in the sport that they love.

[Gareth Thomas]

Does my hon. Friend accept that many fans want to see premier league football clubs doing the right thing by all their staff? Does she share my view that it is highly disappointing that only four premier league clubs pay the living wage?

[Dr Allin-Khan]

I thank my hon. Friend for his excellent intervention, and I share his thoughts, views and feelings that everyone should be paid the wages that they deserve, particularly when they work hard, out of hours, supporting the beautiful game of football.

Returning to football supporters in stadiums, the current system simply is not working and is not safe. Standing happens frequently, sometimes in steep tiers where the seat in front barely goes above the ankles of the person who is standing behind it. When I brought together 50 supporters’ trusts for a parliamentary roundtable, they made clear what they were asking for: small sections of a stadium that can be converted to accommodate those who want to stand, allowing them to stand safely, while giving those who want to sit the enjoyment of watching a game without people standing in their way. I am a football fan, and I attend matches regularly. I know the dangers that can arise for a young family when there are people standing in front of them. Children often have to stand on their seats to watch the game.

--- Later in debate ---

[Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Moray (Douglas Ross). Many community organisations in England would recognise his concern about funding cuts. I come from the constituency that produced Sir Roger Bannister. Members of organisations such as Harrow Athletic Club, Metros Running Club and Jetstream Tri Club pound the paths in Harrow that Sir Roger once trod. I am only too well aware of the funding constraints facing Harrow Council and, indeed, other local authorities.

I want to concentrate the bulk of my remarks on two issues, and if time allows, I will raise one other issue at the end. The first issue is the one I raised in my intervention on the Minister, which is the coverage afforded on television and in the media more generally to women’s sport. As the father of a four-year-old daughter, I have been struck by how little coverage of women’s sport there is on mainstream television. There has been some improvement of late, and it is certainly true that there is a spike whenever a major women’s championship takes place. However, the highly commendable organisation Women in Sport, which did research into this issue, notes that only 10% of TV sports coverage is dedicated to women’s sport at the moment, compared with 7% across all media. When it looked at a number of countries, it identified that there were more hours of women’s sports coverage in the media in Romania than here in the UK.

It is not as if there is not substantial interest in seeing more coverage of women’s sport. Recently released figures show that there is a growing appetite for watching women’s sport. Indeed, research from specialist data measurement company Nielsen shows that almost 50% of people would watch more women’s sport if it were accessible on free-to-air television, while almost 40% would watch it if it were available online.

If we are to see a significant change, it will come down to Ministers holding the feet of the free-to-air broadcasters to the fire. It would be good to hear more about what the Minister is willing to do in that area. If the free-to-air broadcasters are not willing to move quickly, changes to the licence arrangements may be required to apply the appropriate financial pressure.

I share the view of my hon. Friend the Member for Tooting (Dr Allin-Khan) that reform of the premier league is overdue. There is not enough financial transparency. Our fans do not have enough power to hold owners to account. There certainly is not enough investment from premier league revenues into grassroots sport. If the Football Association has to think about selling our greatest sporting asset—Wembley stadium—to get substantial investment into grassroots sport, that is an indicator that the Premier League is not doing enough. A 10% share of the TV rights that the Premier League secures every year would have raised more than the amount of money that the Football Association hoped to generate for grassroots sport from the sale of Wembley stadium.

My hon. Friend the Member for Cardiff Central (Jo Stevens) is right to say that not only the Welsh rugby union but a whole series of premier league and championship football clubs could do a lot more to tackle the issue of paying the living wage to the poorest paid workers in sport.

Lastly, there are Indian elections coming up shortly. I raise that in a debate about sport because it would be wonderful to see an Indian premier league match hosted here in the UK. Many of my constituents would welcome the opportunity to see that just as much as American football is enjoyed at Wembley stadium.

Oral Answers to Questions

Gareth Thomas Excerpts

Tuesday 11th December 2018 Commons Chamber

[Mr Hammond]

That is certainly one of the levers that we can pull, and I am happy to look again at how we support home energy efficiency.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

When will the Government bring forward proposals to allow well-funded credit unions to provide low-cost credit cards and low-cost car loans, and to invest in other social programmes such as energy co-operatives and housing schemes?

Oral Answers to Questions

Gareth Thomas Excerpts

Tuesday 6th November 2018 Commons Chamber

[Mel Stride]

I recognise the huge amount of work my hon. Friend has put into the issue of revitalising our high streets, and his representations to me and other colleagues. The £675 million future high streets fund will be bid for on a competitive basis through local authorities, so it is very important that all Members encourage their local authorities to come forward with their bids.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

T4. The co-operative movement in the UK has a turnover of £36 billion. Given that it employs thousands, and that thousands will benefit as a result of the economic and social benefits that co-operatives bring, why was there no mention of the co-op movement in the Budget?

[The Economic Secretary to the Treasury (John Glen)]

As the hon. Gentleman knows, the co-operative movement is very important to our economy; we have met to discuss various aspects of its future. I am happy to meet him again to discuss the matters that he wishes to bring forward.

Oral Answers to Questions

Gareth Thomas Excerpts

Tuesday 3rd July 2018 Commons Chamber

[Robert Jenrick]

We are investing significant funds, including £92 million to tackle congestion in the south-west and a portion of a £200 million fund for full fibre, and we are providing £40 million for small and medium-sized enterprises through the British Business Bank, which will go to Cornish small businesses.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

rose—

[Mr Speaker]

There is a lot to be said for the London Borough of Harrow—I used to live near it myself—but it is a considerable distance from Cornwall. We will get to the hon. Gentleman in at a later point in our proceedings.

--- Later in debate ---

[Mr Philip Hammond]

That consultation was announced by the Secretary of State for Housing, Communities and Local Government. I am acutely conscious of the risks that my right hon. Friend sets out. I assure him that I have looked very carefully at the wording of the consultation and I am confident that we will not fall into the trap that he suggests. We are looking at making a three-year term the default option for private sector renting.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

T6. In its report published today, which was commissioned by the Co-op party, the New Economics Foundation identifies lack of access to finance as a significant inhibitor in the growth of the co-op sector. While I am grateful to the Economic Secretary to the Treasury for his interest in this area, I wonder what steps the Treasury might now take to tackle that problem.

[The Economic Secretary to the Treasury (John Glen)]

I held a workshop with representatives of various credit unions this week, and one with community development financial institutions last week. I have convened a working group from the financial inclusion taskforce, which will meet in September to consider urgently expanding access to credit options on better terms than the high-cost ones that exist in the market. We are doing all that we can to incentivise growth in that sector.

Capital Needs of Co-operatives

Gareth Thomas Excerpts

Wednesday 25th April 2018 Westminster Hall

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I beg to move,

That this House has considered capital needs of co-operatives.

It is a privilege to serve under your chairmanship, Sir David. It is a particular delight to be able to talk co-operatives with the Treasury Minister twice in two days. For those of us who want the co-operative and mutual sector of our economy to double in size, fixing the difficulties that co-operatives have in accessing the capital they need to expand is critical. Co-operatives UK, the co-operative movement’s trade body, has done an excellent job in recent years of championing community shares as one way for local co-operatives to raise significant but comparatively small amounts of capital to grow. Lottery money is currently being used by Co-ops UK’s community share unit to support community shares offers, but more could be done if the Government renewed their previous interest in this area. It would be good for Ministers to explore what else they can do to encourage the further expansion of community shares.

More recently, Co-ops UK, working with retail co-op societies, has begun to explore whether fixed-term withdrawable share capital could be developed, allowing more established societies to raise patient and engaged equity finance from members and non-member investors, up to a £100,000 maximum individual shareholding limit. The Financial Conduct Authority does not always get a good press, but it has been very supportive of that work, and I hope the Minister will encourage the FCA and Co-ops UK to continue to champion that new potential source of capital for many co-operatives. The chief executive of Co-ops UK, Ed Mayo, deserves praise for his skill in getting this work so far down the road.

Other parts of the co-operatives and mutuals sector of our economy—notably building societies, friendly societies and mutual insurers—have been subject to legislative changes permitting them to raise much larger amounts of additional capital. These reforms are yet to apply to the co-operative world.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for allowing me to intervene—I sought his permission to do so beforehand. Does he agree that co-operatives should be allowed to invest in social housing? It is the very essence of what a co-operative seeks to do. Benefits are involved. I gently suggest that the Minister should consider revisiting the ability of co-ops to invest capital funds directly in social housing.

[Gareth Thomas]

The hon. Gentleman makes an extremely good point. If he can use his not inconsiderable influence on the Minister to support what I will say, we might be able to accelerate the addressing of some of the problems co-ops face in investing in social housing. Unless co-operatives can raise additional capital, they cannot expand or develop to their true potential. At worst, they are at risk of demutualisation, as I will set out. Co-operatives do not issue shares in the same way as investor-owned companies—to do so would mean demutualising—so bigger co-operatives can face considerable difficulties raising additional capital at the level they need. Their growth inevitably is limited and their ability to compete on equal terms is reduced.

In short, legislation is needed to fix this problem—legislation that protects that unique governance model of co-operatives, but allows them to issue permanent investment shares. Such shares could allow consumer co-ops to grow by acquisition and by developing new business offers for their customer members. Football supporter-owned clubs could fund the development of new stadium facilities, grow their businesses, serve their communities and consolidate their income streams. Co-operative-owned energy generators could attract long-term investment to build even more energy infrastructure of the sort we need in this country. A lack of capital limits a co-operative’s growth and ability to develop new services. The growth rate of that co-operative is constrained by its relative inability to add significant capital through retained earnings.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

In my constituency, the Headingley Development Trust is doing its second community share offer. It has already managed to raise £232,395 from individuals—I declare an interest as an investor in that share scheme. That money is being matched by £100,000 from the community shares booster programme from Co-ops UK, Locality and Power to Change. The trust can have only £100,000 because of the cap. Energy, community facilities and social care can all be aided by lifting the cap.

[Gareth Thomas]

My hon. Friend raises a good example of the difficulties that co-operatives face. I pay tribute to his work championing the co-operative he mentioned. He also underlined my point about the good work that Co-ops UK has done in championing community shares. His fundamental point is absolutely spot on: there is a limit to the amount of capital that co-operatives can raise because they do not have the instruments available to them that are available to many of the non-co-operative businesses that operate in our economy.

Like all businesses, co-operatives need to be able to benefit from the economies of scale that are often available only by growing their businesses. They need to gather sufficient capital to serve their members well, to extend services to new members and to expand their services. Without new capital, many co-operatives could be driven into inappropriate corporate forms through demutualisation. Many of us in the co-operative movement can think of many examples where that has already happened. If co-operatives convert to other corporate forms, consumer choice in our economy is reduced and large numbers of consumers would no longer have non-listed, member-owned options in the marketplace. That reduces competitive pressure from the operation of different business models in the same market and adds to systemic risk to the economy.

There is inevitably a limit to the amount of debt that can or should be raised by any business. Mutual shares would present an opportunity for small mutuals to raise funds that they may not be able to raise otherwise, and for larger co-operatives to raise funds that subordinated debt does not provide.

Additional capital helps in a number of ways. It could be used in tactical acquisitions, which would help businesses’ competitiveness. They could also look at local infrastructure development potential. There are a number of examples overseas of similar co-operative share offerings. Examples from Canada, the Netherlands and across the European Union show how mutuals can enlist their members in raising capital through the issue of new deferred shares. In summary, the benefits offered provide evidence that Government support for such a Bill would create a viable new opportunity for mutuals to attract new capital and deliver positive outcomes for mutuals and consumers.

Currently, co-operatives largely have to generate capital for growth internally. They have no shares to sell and hence no access to equity markets. Ongoing capital in co-operatives consists of retained earnings and bank borrowing, with some smaller co-ops also raising withdrawable share capital. The lack of access to reliable capital can be a serious limiting factor on the growth and development of consumer mutuals. How these businesses are constructed means that the introduction of external capital without additional safeguards, such as limits on voting rights and distributions, would water down the mutual purpose of the organisation. The International Co-operative Alliance said that co-operative capital needs to offer

“a financial proposition which provides a return, but without destroying co-operative identity; and which enables people to access their funds when they need them. It also means exploring wider options for access to capital outside traditional membership, but without compromising on member control”.

Consolidation between mutual businesses has been the short-term response to pressure in the past. That has created a small number of firms of critical size that are better able to compete in their markets. Without access to new capital, however, organic growth has remained a difficult challenge. In staying true to their business purpose, customer mutuals are therefore limited by their options to access capital for growth. Some external capital instruments do exist in mutuals. In building societies, more than a billion pounds of deferred shares have been issued. Nationwide building society and Cambridge building society have issued core capital deferred shares. That new capital instrument is designed for mutual building societies and enables them to raise common equity tier 1 capital to supplement retained earnings and diversify their capital base.

The Government supported legislation for mutual insurers and friendly societies to issue deferred shares in 2015, although I note that the restrictive position of Her Majesty’s Revenue and Customs has prevented its full implementation and the relevant orders from being laid before the House. It would be good hear whether the Minister can unlock that particular blockage.

The mechanisms for funding co-operatives are more restricted than those for companies. It is not possible for co-operatives to have equity share capital, as understood in the company law context, because equity ownership is incompatible with the co-operative principles and would therefore be prima facie unregistrable. It is also not possible for societies for the benefit of the community because distributions of income and capital are not permitted.

Co-op societies, like building societies, were historically funded by their member customers, who were required to subscribe a minimum amount of share capital in order to be afforded full membership rights. That might be built up over a period of time, including by leaving undrawn dividends. Subject to the minimum capital requirements, therefore, members were permitted to withdraw funds from their account, and share capital was typically withdrawable. One of the consequences of that was that members’ share capital remained static in value. Although it was risk capital in the sense that it could be lost on insolvency in paying debts owed to creditors, it did not give members an undivided share in the value of the underlying business.

While the co-operative carried on trading, members therefore had no expectation of any entitlement to more than the repayment of their original capital. Their real interest was in the continuity of the existence of their society, providing goods and services to meet their needs. As a direct result of that approach to funding and ownership, any undistributed surplus was retained as reserves and shown as such in the accounts, and although such reserves constituted members’ funds for accounting purposes while the society remained a going concern, they did not belong in a traditional ownership sense to the members. They were more like assets currently being held by the body of members, almost as trustees for the purposes of the society.

An appropriate and sustainable basis of funding is a prerequisite for any business if it is to start up and survive, and the requirements for funding are likely to change or evolve over the life of the business. The restrictions in relation to the funding of co-operatives, which are created by legislation, are therefore fundamental to the future use of the co-operative form, and to the future viability of co-operatives.

I do not expect the Minister to give a guarantee of support today for the new form of investment capital for co-operatives, but I hope he will take time to reflect. Although I appreciate he has committed to meet me on another issue, perhaps he will be willing to meet me with Mutuo, the think-tank in the co-operative world, which has been developing this instrument, and which supported Lord Naseby when he introduced similar measures in 2015 which, as I said, are currently held up as a result of the unfortunate attitude of HMRC.

Another new type of raising capital that I want to put on the table comes from Italy. Worker co-operatives can play a significant part in rejuvenating firms that would otherwise close in places where there is a supportive policy and business infrastructure to facilitate that. It can act as an essential component of a progressive employment policy. Perhaps the best example of this is the so-called Marcora law from Italy, where conversions take place as negotiated employee buy-outs between workers, the exiting owners, the co-operative sector, the nearby local authorities, and bankruptcy courts. Under a legal framework—the Marcora law—an infrastructure of support has been created to assist the worker buy-out of firms. State funding that would otherwise be spent on unemployment benefits is used to finance the new co-operatives. It has been remarkably efficient for the Italian taxpayer. It is estimated that that investment has safeguarded nearly 14,000 jobs in 270 businesses and generated an economic return for the Italian state of almost seven times the capital invested.

The Italian method of creating staff buy-outs is essentially a negotiated conversion and business restructuring mechanism, with a unique set of supportive policies and a financing structure facilitated by a collaborative approach between staff, the co-op sector and the Government. Some resources are provided by the Italian state Treasury. Again, I do not expect the Minister to commit to this measure today, but in due course it would be good to hear his reflections on that example.

Perhaps on another occasion it would be good hear what further steps the Minister will take to try to encourage the expansion of the credit union sector, where capital remains a significant issue. The lack of resources for marketing is probably one of the biggest things holding back that sector’s development.

Financial Guidance and Claims Bill [Lords]

Gareth Thomas Excerpts

3rd reading: House of Commons & Report: 3rd sitting: House of Commons
Tuesday 24th April 2018 Commons Chamber

[Craig Tracey (North Warwickshire) (Con)]

First, I should like to declare an interest as the current chair of the all-party parliamentary group on insurance and financial services. I welcome the Bill, because it will tackle some of the important issues that my constituents talk about. It includes a commitment to ban cold calling relating to pensions and to the creation of a single financial guidance body—an SFGB. I know that this approach also has the broad support of the insurance and financial services industry, but it is important that the SFGB should work with all stakeholders to fulfil its objective and of course ensure good consumer outcomes. With the Bill, we have an excellent opportunity to improve financial resilience by promoting early intervention to help to prepare people for income shocks and life events. These preparations include planning ahead for care and understanding the benefits of protection products such as income protection insurance, critical illness insurance and life insurance.

There is a lot in the Bill that I could talk about, but given the time constraints, I want specifically to speak against new clause 8, which seeks to put a duty on the Financial Conduct Authority to ban unsolicited direct approaches by claims management services. I agree with the Government that the Information Commissioner’s Office is best placed to implement any ban and that existing legislation means that data gained illegally is already restricted. However, I agree that there is an urgent need for reform relating to claims management companies.

Previously, there have been calls for the FCA to assume responsibility for CMCs, so the fact that the Government have taken action on this is to be warmly welcomed. The Association of British Insurers has stated:

“Confirmation of tougher regulation of claims management companies cannot come soon enough for people who are plagued by unsolicited calls and texts. Disreputable firms are fuelling a compensation culture that contributes to higher insurance costs for many.”

Last year alone, there was a total of 752 authorised personal injury CMCs, more than in any other claims sector, including PPI. Measures in the Bill will go some way towards tackling bad practice in the personal injury claims market, which has been costly for insurance companies, put up premiums for consumers and frequently delivered outcomes in which claimants’ interests were not put first.

Added to some of the measures in the forthcoming Civil Liability Bill, such as tackling the high frequency of whiplash claims, this Bill will help to ensure the success of the Government’s wider efforts to tackle these problem areas. It is therefore encouraging that the insurance industry has expressed confidence in the FCA’s more robust regulatory regime and its ability to properly oversee these firms, citing two significant benefits, both of which will play a vital role in addressing the problems associated with this sector.

First, a strong regime based on understanding the business models of individual CMCs will prevent firms that do not offer good value to consumers from operating. Secondly, personal accountability for senior managers of CMCs will ensure that when a firm struck off, its directors cannot simply resurface as a new CMC, as is currently happening. It is anticipated that, as a result of this change, consumers will be given more information about the services that CMCs offer and more transparency about the fee structure. It is therefore important that the improved regulation of CMCs should be implemented alongside the personal injury reform proposed in the Civil Liability Bill. It can only be good news for consumers when their interests are put above all others.

As I have said, this is an excellent Bill, but I would like to propose a couple of areas in which I think it could be strengthened, and I ask the Minister to take them into consideration when summing up. First, it would be useful if he clarified the exact scope of the services that the SFGB will provide for consumers. There is a great opportunity to look at how the Department for Work and Pensions could work with the financial services industry to make guidance a recognised norm and to look at ways to support interventions that could improve the retirement process, such as the introduction of a mid-life MOT.

Secondly, will the Minister provide a timeline for the introduction of the FSGB and tell us when the FCA will assume responsibility for CMCs? Swift action is necessary, particularly in relation to CMCs, given the drastic spike in claims relating to gastric illnesses by people who have been on holiday. It is no coincidence that this surge has coincided with CMCs preparing for the deadline for bringing PPI claims and the introduction of measures to tackle whiplash claim frequency.

The Opposition amendments to this part of the Bill are unnecessary. The Government are committed to banning cold calling in relation to pensions and by CMCs. Moreover, they and the SFGB will keep cold calling under review. If the Minister will give consideration in his summing up to the points I have made, I will have no hesitation in supporting the Government through the Bill’s remaining stages.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I rise to speak to the three amendments in my name. According to a recent Bank of England survey, the average level of household debt, excluding mortgages, is £8,000. While everybody should be able to access basic debt advice, people on low incomes with much higher levels of debt, at higher rates of interest, clearly need significant support. Unlike in the United States, it is difficult to work out with any certainty where such people are living in the UK, beyond relying on an individual to approach their local citizens advice bureau or another advice service.

At present, the new financial guidance body will not have access to data to allow for a detailed mapping of debt at a local level. Indeed, it will not have access to a full picture of the activity of banks and other lenders in our communities. There is no requirement on banks, payday lenders and other financial services providers to be fully transparent about the services in each of our constituencies—specifically where they lend, what rate they lend at, and the types of loan that they offer. Were that data available to public bodies, it would allow for the accurate mapping of who is lending and what is being loaned. Banks and other lenders do hold such data down to postcode level, and such data are released in the United States. Many British lenders that are active in the US are used to releasing that information, which allows public bodies to map the activities of banks and other lenders.

My amendments 1 and 2 would allow the single financial guidance body to facilitate the release of that information by lenders in an anonymised form so that we could know where debt is concentrated and what types of credit are used in different areas. That would allow for better, more strategic responses to the household debt crisis with which the House is familiar. The data would help to inform where to target the debt advice funding that the SFGB will dispense, encourage more engagement between mainstream lenders, and allow the community finance sector to scale up the provision of affordable credit in areas where there are specific problems. Indeed, such data would reveal market gaps and the communities excluded from mainstream credit.

Fair access to financial goods and services is a basic requirement for full engagement in modern society, but Thamesmead, an estate of 55,000 people in south-east London, has not been home to a mainstream bank branch for a long while. Charities report anecdotally that high-cost credit lenders such as doorstep or payday lenders are very active. More and more bank branches are being closed by the big banks, which is leaving whole communities, some in the poorest areas of our country, without a single mainstream bank branch. Thamesmead is not an isolated example.

At the same time, rumours persist that the big banks want to pull the plug on free cash machines. Which? has reported that over 200 communities in Britain already have poor ATM provision or no cash machines at all. The combination of a lack of access to cash machines and to mainstream bank branches could create the space for a much bigger increase in the activities of high-cost credit companies, doorstep or payday lenders or, worst of all, illegal loan sharks, as a response to the needs of people in such communities for short-term loans. We need to know where the other Thamesmeads are across the country so that charities, community banks and credit unions can be supported by the financial guidance body and other statutory bodies to target financial exclusion in such areas by signposting people to responsible financial providers.

In 2015, when considering this specific problem, the Financial Inclusion Commission, which was set up by the Government, argued for a much wider level of data disclosure to develop a greater understanding of the problem. It said specifically:

“If lenders were required to disclose data by postcode on credit applications and rejections, policymakers would be better able to understand the scale and shape of the low income credit gap.”

Since the financial crisis, banks and other lenders have withdrawn from higher-risk lending and raised the threshold for accessing mainstream credit. In turn, this has restricted the credit available to those with low credit scores, leaving them at the mercy of higher-cost lenders to bridge their income gap. Surely part of the long-term solution to the household debt crisis is to make it easier for low-cost credit providers and other alternatives.

It is true, as Ministers have previously suggested in Committee and in a letter to me, that there are other sources of data on debt. The Office for National Statistics and the Bank of England publish data on lending, but only at UK level—the data is not broken down by constituency or by area. StepChange, too, publishes some data on lending, as does the Money Advice Service, but the Minister might not be aware that it publishes only estimates of the number of people who are over-indebted.

I would not dream of criticising the Money Advice Service, but its data on lending does not go anywhere like far enough to meet the recommendations of the Financial Inclusion Commission. The Money Advice Service does not routinely collect information about the extent of debt problems at the most local level. Its last significant report was back in March 2016, and it set out estimates of the number of over-indebted households down to local authority level, not postcode level, which is what we need. The Money Advice Service data are estimates based on survey work, not actual individuals who take out loans.

I should be clear that some lending data is already released. The coalition Government, to their credit, required the British Bankers Association, which is now UK Finance, and the Council of Mortgage Lenders voluntarily to publish some data by postcode, primarily to try to tackle the challenges that small businesses were facing when accessing credit.

There are problems with the data. For example, it does not include high-cost, short-term credit—payday lenders. Additionally, it does not disclose lending levels or rates at postcode level. Some details of loan applications and credit providers’ registers are not released either, so a full picture of the level of lending at a postcode level has not yet been able to emerge.

At the moment, the data is released voluntarily. Legal underpinning is needed so that more statutory bodies working in this field can more easily negotiate improvements in data. Specifically in this context, for example, the single financial guidance body should be able better to negotiate the release of the data that it needs.

I say this gently to the Economic Secretary, who will be very helpful to me tomorrow, but efforts to re-engage the Treasury in getting UK Finance to improve the usefulness of the data its members release have not had much success recently. At the very least, I hope he will be willing to join me in meeting national groups operating in this field to hear their concerns about the data, and perhaps he might be willing to use his leverage to get at least small improvements in that area.

In the United States, the Community Reinvestment Act means that banks and other lenders have to report what they are lending, where to and at what rate. The disclosure requirements are critical as they enable independent, informed assessments of what the banks are doing. Crucially, they keep the banks honest. Before the CRA, access to credit was scarce in deprived areas, and that lack of access contributed to and prolonged the decline and deprivation in such communities.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

My hon. Friend makes an excellent point, but does he agree that the disclosure of such data would highlight the hotspots in communities such as the ones that we represent, and would therefore allow the Department for Work and Pensions to put in the necessary resources so that jobcentres and other advice bureaux can act as a preventive measure so that we do not see more of our constituents with little chance of getting out of the vicious circle of high-cost borrowing?

[Gareth Thomas]

My hon. Friend makes a good point.

In the United States, federal banking regulators regularly assess how banks are meeting local credit needs. Their assessments affect the way in which the banks are allowed to expand, merge, do acquisitions and so on. Banks can get credits towards their assessments if they invest in community banks or credit unions. Not surprisingly, both the community banking movement and the credit union movement are in even better health in the US than they are here.

Santander, HSBC and Barclays all operate in the United States, where they release far more data on lending, down to postcode level, than they do here. So surely the questions for this House are: why are they not willing to do that here, too; and, as I believe, should they be forced to do so? Last October, Santander announced an $11 billion, five-year settlement on lending and community development in eastern parts of the United States, which is the market in which it operates. That represented a 50% increase in its Community Reinvestment Act-related activity. No such equivalent increase has been announced here in the UK. The Community Reinvestment Act has cross-party support in the US, being backed by Republicans and Democrats alike, including for its data disclosure requirements. If Ministers are not prepared to accept my amendments, I would wish, with your permission, Madam Deputy Speaker, to press amendment 1 to a Division. These amendments are not onerous. Banks and other lenders record this data, and although a little work would be needed so that the information could be released in a useful format, a similar system works particularly well in the United States. In turn, the disclosure of lending details could help the single financial guidance body to make more effective choices.

I shall deal briefly with amendment 31. One key challenge for the single financial guidance body will be, as we all know, to help those who need loans, for whatever reason, to access the cheapest products—those offered by credit unions fall into that category. Surely the SFGB should be mapping where credit unions exist and what further action can be taken to promote the take-up of their services by those who are most in need. Credit unions have very low administration costs. They simply do not have the megabucks of a major bank or a payday lender’s marketing department, so many of those who most need the support that credit unions can offer are often unaware of the services they provide. Surely another challenge for the House is to work out how we help credit unions to make more information available about the products on offer. I know that Ministers are sympathetic to efforts to expand the credit union sector, so I ask them to give specific attention to thinking about what further steps can be taken to help the credit union movement to expand and to support the SFGB in achieving that aim.

[Julian Knight (Solihull) (Con)]

I refer Members to my entry in the Register of Members’ Financial Interests. I completely agree with what the hon. Gentleman says about credit unions. Does he agree that one key aspect of trying to promote them is improving their professionalism, IT and this information, and using the potential for workplace credit unions? Should we not try to bring this through the workplace and payroll?

[Gareth Thomas]

I agree with that point, which is why it has been encouraging over the past 10 to 15 years to see Departments beginning to do their bit to encourage the workplace take-up of credit unions. I hope the Economic Secretary may be able to tell me that Her Majesty’s Revenue and Customs will follow this trend soon, but the point about trying to increase professionalism is well made. Again, it would be good to hear commitments from Ministers that some of the problems that credit unions face due to poor regulation by the Financial Conduct Authority will be dealt with.

[Gareth Snell]

I apologise for intervening again, Madam Deputy Speaker. I was a director of a credit union in Staffordshire, but unfortunately it went under because the regulation from the FCA simply meant that it became unviable, because the authority did not understand the operating model. I therefore very much agree that the FCA has a big role to play, along with the Government, in making sure that credit unions are sustainable, because they offer a hope for constituents who would otherwise use high-cost lending.

[Gareth Thomas]

My hon. Friend amplifies the point I was making. One last point to make is that there is a need for legislative change to allow credit unions, in particular, to offer loans for cars and—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Before the hon. Gentleman comes to his last point, there seems to be a lack of understanding generally in the Chamber about what happens at this stage in a Bill. I cannot put a time limit on speeches; this is Report stage. We have two groups of amendments to go through, and we have until 6 o’clock. Many questions have been asked, and Members will expect the Minister to have some time to answer them.

If we go on as we have done for the last two hours, there will be no debate on the second group of amendments. It will not be up to me to explain to the hon. Member for Liverpool, Wavertree (Luciana Berger) why she does not get to make her speech on her amendment in the next group. Every minute that people take in this House takes away from another colleague. Of course, there are people who prefer to hear the sound of their own voice, who only want to hear their own arguments and who will not give time for others, but I am warning now that if speeches take more than three minutes, we will get to a stage whereby the second group of amendments will not be heard. I cannot stop the hon. Member for Harrow West (Gareth Thomas) finishing his speech—he can take as long as he likes, as far as the Chair is concerned—but I am sure that he will have a view to helping his colleagues.

[Gareth Thomas]

I had finished, Madam Deputy Speaker.

[Madam Deputy Speaker]

I am delighted to hear it.

Draft Enhanced Partnership Plans And Schemes (Objections) Regulations 2018

Gareth Thomas Excerpts

Wednesday 7th March 2018 General Committees

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I am grateful, Mr Rosindell, for the opportunity to comment very briefly on the regulations and to ask the Minister a couple of questions.

As a Co-op Member, I have a big interest in community transport, and in the social enterprises and small community businesses that operate in most of our constituencies, often surviving only through the contracts they win from local authorities and local clinical commissioning groups. They use some of the economies of scale that they are able to deliver in order to provide, at no cost, other transport services for elderly and vulnerable people in our communities.

I am interested in how the regulations will affect community transport and, in particular, whether they provide a neat way out of the terrible situation facing many community transport providers at the moment. It looks as though Government changes, allegedly provoked in part by EU legislation, and certainly at the behest of a small number of larger coach and bus operators, are likely to stop community transport being able to bid almost exclusively for local authority and CCG contracts.

Those changes will potentially put those community transport providers out of business, or require them to ensure that the drivers who work for them have much greater training and acquire licences that are much more costly, in both time and financial resources. I am thinking of Harrow Community Transport, which serves my constituency, which has made it clear to me that it is extremely worried by changes that the Department is currently proposing. Many of its drivers do not want the new licence, which is much more costly, with regard to training and resources.

I wonder whether the draft regulations provide a way out of that conundrum. We are at risk of losing vital local bus and transport services provided in our constituencies simply because of the greed of a few larger bus and coach operators, which appear to have successfully persuaded the Department to ignore the needs of the much smaller but crucial community transport providers.

--- Later in debate ---

[Ms Ghani]

I welcome the comments from the hon. Member for Keighley. He is absolutely right: bus services are vital for getting people across our constituencies. They are also vital for our constituents because family demographics have changed and more and more people rely on bus services; more people travel to work on a bus than on any other form of public transport.

To date, 30 providers are in negotiations with the Department for Transport, and many more have shown an interest. I have some facts and figures to hand, and if I am able to make them public, I will of course do so. We are keen to ensure that those relationships come about as soon as possible. We are keen to enable local authorities to work with local bus operators to provide a service that passengers want to take.

The hon. Member for Harrow West spoke about community transport, which is not covered under this regime because community transport is not the bus service we are trying to tackle here. This is about members of the general public getting on a bus service that stops at stops; it is not a dial-a-ride or specific kind of service.

[Gareth Thomas]

I am grateful to the Minister for that clarification. Nevertheless, will she recognise the depth of concern across the House about the future of community transport, given what her ministerial colleagues appear to be proposing in response to pressure from a small group of bus and coach operators?

[Ms Ghani]

I believe that the Minister responsible for community transport has been in communication with local authorities and people who are actively involved in that particular community bus situation. The Minister has announced a fund of £250,000 in this financial year to fund advice for operators that might be affected by any changes. We are also working with the Driver and Vehicle Standards Agency to ensure that a proportionate response is made to operators working toward urgent compliance.

Returning quickly to the hon. Member for Keighley, because I know he has a huge amount of experience in this area and I would not want to give him any inaccurate information, Nottingham City Council will probably be the first to implement that, perhaps as early as later this year.

With regard to the comments by the hon. Member for Reading East, I am pleased that Labour supports the regulations. It is vital that we encourage bus usage, and to do that we must be able to support our local authorities and they must be able to form partnerships with local bus operators to provide a service that passengers want. They can do that by having priority bus lanes, looking at ticketing and looking at the service that is being provided. The key point is that the decision is made locally.

Enhanced partnerships are a new type of partnership agreement that did not exist prior to the 2017 Act, and I am encouraged by the interest that local authorities and bus operators have already shown. The objection mechanism is a key part of the regime and it is important that the mechanism in the regulations strikes the right balance between allowing operators a fair say on what should go into these schemes and preventing a minority from stopping improvements that would benefit passengers.

The hon. Member for Reading East asked for information on the consultation process. That process was conducted fully and involved the Confederation of Passenger Transport, the Urban Transport Group, the Association of Transport Coordinating Officers and the Association of Local Bus Company Managers, which represents small bus operators. The consultation process looked at mileage, patronage and threshold, which were agreed by the majority of respondents. That is how we came up with the figure we have today.

The fact that the mechanism is in secondary rather than primary legislation gives the flexibility to amend and further debate the rules in future. My Department will not hesitate to do so if that is required to ensure the ongoing success of these schemes.

--- Later in debate ---

[Ms Ghani]

I thank my hon. Friend for his comments. He is a strong champion for his community. The draft regulations do not cover community transport; they cover a bus service that is picked up by members of the public. They do not allow anyone to monopolise the market. If a local authority wants to set up a partnership that enhances a bus service within a community, it is able to do so without objection from one provider that tries to crowd out everybody else or lots of small providers that do not provide enough services to be able to decide what should be provided in that community. I will take his comments to the Department and to my colleague, the Minister with responsibility for community transport. Such partnerships will enable local authorities to leverage more with bus operators to provide a service that is important for their communities.

[Gareth Thomas]

Will the Minister be willing to commit herself—or, more appropriately, her colleague, the Minister with responsibility for community transport—to meeting a group of Members from both sides of the House who are concerned about the future of community transport and the Government’s proposals for changes to licensing?

Financial Guidance and Claims Bill [ Lords ] (Third sitting)

Gareth Thomas Excerpts

Tuesday 6th February 2018 Public Bill Committees

[John Glen]

It is a pleasure to serve under your chairmanship once again, Mr Rosindell.

Government amendments 3 and 4 are small consequential amendments to bring relevant provisions into line with the changes made by clause 24 to section 21 of the Financial Services and Markets Act 2000. Clause 24 amends FSMA to enable the Financial Conduct Authority to regulate specified activities in relation to claims management services in Great Britain. That includes extending section 21 of FSMA so that the financial promotions regime, which deals with advertising and marketing by regulated firms, applies to claims management activity. Government amendments 3 and 4 will ensure that the financial promotions regime can function effectively. I am sure that Members will agree that it is necessary to make those amendments to ensure that claims management activity is captured.

New clause 7, which was tabled by the hon. Members for Birmingham, Erdington, for Weaver Vale and for Lewisham, Deptford, seeks to ensure that the FCA adheres to a set of regulatory principles in relation to acting in the best interests of consumers and managing conflicts of interest fairly. Aside from the provisions in general consumer law, the FCA already applies rules to firms that conduct regulated activities in relation to their dealings with consumers.

First, regulated firms must adhere to the “principles for businesses”, which are fundamental obligations set out in the FCA handbook. Principle 2 requires firms to conduct their business

“with due skill, care and diligence.”

Principle 6 requires a firm to

“pay due regard to the interests of its customers and treat them fairly.”

Principle 8 sets out that a firm

“must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.”

Secondly, the FCA’s “client’s best interest” rule states that a firm

“must act honestly, fairly and professionally in accordance with the best interests of its client”.

That rule applies to a number of regulated activities. Thirdly, many FCA rules also contain an obligation on firms to take reasonable care for certain regulated activities. Finally, the rules in the FCA handbook are supplemented by more sector-specific rules in various FCA sourcebooks.

Under its existing objectives, when the FCA takes responsibility for the regulation of claims management companies, it will be able to apply its existing principles for businesses and to make any other sector-specific rules that may be necessary. To secure appropriate consumer protection, the FCA supervises against those rules and other provisions, and can take enforcement action against firms where necessary.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Does the Minister accept that there is a risk that the FCA has been captured by some of the bigger financial interests, and that additional legal protection is therefore required to rebalance how it operates to properly protect the consumer interest?

[John Glen]

I acknowledge that such concern has been widely expressed throughout the passage of the Bill. However, the FCA has issued total fines of more than £229 million. In its view, its regulatory toolkit is currently sufficient to enable it to fulfil its consumer protection objective. The FCA will consider the precise rules that apply to claims management companies and how they form an effective regulatory regime overall. In doing so, the FCA will need to take into account its statutory objective of securing an appropriate degree of protection for consumers. It will also consult openly and publicly on the proposed rules.

The final regime is not set without consultation or reference to the legitimate concerns raised during the passage of the Bill. I note the hon. Gentleman’s observations, but they can be accommodated by the way in which the FCA will handle the matter. Given that, the Government do not believe the new clause is necessary. According to the explanatory statement, the new clause would introduce a duty of care on claims management companies. I will provide some more detail on that duty of care because I have thought a lot about it and have new points that I want to raise following Second Reading. The Government recognise that there are different views on the merits of introducing a duty of care for financial services providers and what it would mean in practice.

Macmillan Cancer Support has run an excellent campaign drawing attention to that important issue. Last week I met Lynda Thomas and her team from Macmillan in the Treasury to discuss their work and their concerns around the proposed duty of care. They told me of their work with Nationwide and Lloyds. They have been working in partnership with the sector on the role of firms in supporting customers.

[John Glen]

I acknowledge the case, but it is not for me as a Treasury Minister to comment on it. We need to be clear about the impact of the duty of care and examine it carefully. It is right that we challenge practices that are not up to standard. The question is how we most effectively achieve that without wider collateral damage.

On Macmillan’s partnership work in the financial services sector in supporting customers affected by cancer, I pay tribute to the work done and I am grateful for the insights that it brings, but there is huge uncertainty around the potential impact a duty of care could have on both firms and consumers. As with all significant policy changes, it is important to understand all potential pros and cons. I hope Members agree that there would need to be a thorough assessment of the potential impact of a duty of care before any decision is made on a change of policy. For example, a duty of care might enable consumers to bring financial services firms to court. There might be significant cost, complexity and time involved with that, leave alone codifying exactly what the duty of care would mean.

In turn, a duty of care might lead to a negative impact on product provision and approach to innovation, as firms might not want to risk legal challenge based on an untested new concept. Increasing operational costs for firms as a result of a duty of care will inevitably lead to higher prices for consumers, including those in the most vulnerable category. Given those considerations, I hope Members agree that it would not be appropriate for the Government to amend the Bill before a full assessment of the potential impact has been conducted.

The Government believe that the FCA, as the UK’s independent conduct regulator for financial services, is best placed to evaluate the merits of a duty of a care. Recognising the pitch and depth of the legitimate concerns raised, last week I met Andrew Bailey and discussed the duty of care with him, and the FCA will discuss it further. Concern has been expressed that, in the determination to issue a discussion paper post-Brexit, there was too much of a delay. I pressed Andrew Bailey on the need to bring that forward. He understands and acknowledges the desire of Parliament for progress on evaluation, so the FCA now proposes to issue a discussion paper later this year. It will invite contributions from all interested parties on the case for and against a duty of care, what form such a provision might take and consequential issues arising from adopting it. That will be an open process, designed to gather views. I am grateful to the FCA for its commitment to accelerate its proposed timetable.

[Gareth Thomas]

I commend the Minister for pressing Andrew Bailey, because the FCA under his leadership has a reputation of having become a bit pedestrian. However, I do not see why there is a clash between adding the new clause, as my hon. Friend the Member for Birmingham, Erdington proposes, and cracking on with the consultation exercise that the Minister just described. Surely they gel nicely.

[John Glen]

My view, and the Government’s view, is that the pace of that consultation process needs to be stepped up and the FCA needs to respond, with all consequences in mind for vulnerable people with respect to the costs of services and the protections legitimately achieved through the FCA’s activity.

I stress that the FCA has a close focus on vulnerability in its broader work. I note the concerns of the hon. Member for Harrow West, but it works in the interests of all consumers of financial services. In October, the FCA published its “Financial Lives” survey, the first annual large-scale survey of 13,000 interviews, designed to add a substantial new source of data to the regulator’s understanding of consumers in retail financial markets. Subsequently, it published the “Approach to Consumers” paper, which details how it will measure the effects of its actions on consumers, particularly with respect to access and vulnerability. I and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham, take this matter seriously. We will challenge the FCA on the further steps that need to be undertaken.

[Gareth Thomas]

May I push the Minister a little harder? I could understand it if he was arguing that there should be a change to the proposal made by my hon. Friend the Member for Birmingham, Erdington, saying that regulations should be brought forward to give Government the chance to bring in a duty of care once the consultation had taken place. Instead, he seems to be saying, “Let’s not bother putting anything in the Bill that gives us the power to bring that in later. Let’s just wait and see—mañana!—when the FCA can be bothered to get round to the consultation exercise. Then we might look at bringing forward primary legislation.” My worry is that an opportunity for primary legislation will not come around again. I therefore press him to see whether he could be a little more sympathetic to the case my hon. Friend will advance.

[John Glen]

I am grateful to the hon. Gentleman for his remarks. I would not characterise the Government’s position as, “Let it happen mañana and take our hands off the tiller.” I met Andrew Bailey, and this was not his starting point. It is for Ministers to talk to the FCA, take the views of Parliament as clearly expressed by Members on both sides of the House, and use that pressure to force the FCA to address the issue in a comprehensive way that deals with the real experience of our constituents.

The Government have set out that process, and I have set out the rules and facilities that exist for the FCA. I am convinced there is a process in place that will enhance the necessary protection.

--- Later in debate ---

[John Glen]

I am grateful to the hon. Gentleman for his comments. There is broad agreement on how serious the issue is, but I would characterise the Government’s approach as wanting not to send a message but to secure an outcome. They want to secure an outcome when they understand exactly what the impact of the changes might be.

As I said in some of my earlier remarks, there is huge uncertainty about how a potential duty of care would impact on firms and consumers. That is why I am very pleased with the accelerated timetable. I acknowledge that there is no absolute clarity about what will flow from that, but that is because we do not know what the outcome of the discussion will be. However, I take on board the hon. Gentleman’s concerns and I acknowledge his sensitivity to what Macmillan has said—it is unacceptable that 11% of people who have cancer tell their financial service provider—but it is also true, as my hon. Friend the Member for Bexhill and Battle said, that not all banks are doing a poor job. I heard from Macmillan about the wonderful work that Nationwide has done, and I think it is for other banks to reflect on what they need to do to change their behaviours.

[Gareth Thomas]

Nationwide is not a bank; it is a building society, with a very different tradition to the corporate interests of the big banks. I make that as an aside. Although I am not normally a fan of secondary legislation as opposed to primary legislation, I wanted to press the Minister: will he consider the broader point made by my hon. Friend the Member for Birmingham, Erdington—that there might be a case, surely, for the Minister to consider bringing forward on Report the scope for secondary legislation to bring in such a duty of care once the FCA, when it can be bothered, finally produces its consultation document?

[John Glen]

I am grateful for the hon. Gentleman’s comments, but I do not share his characterisation of the FCA’s willingness to engage on this. As I set out, the FCA is engaged in dialogue with Macmillan and has now accelerated the timetable for dealing with the subject. I will reflect on the comments made and see what can be said to give more assurance further on, but I am convinced that the dialogue with the FCA will lead to a proportionate outcome that takes full account of the impact. I therefore reiterate my hope that the new clause will be withdrawn.

--- Later in debate ---

[Gareth Thomas]

I have concerns about clause 30. If the Bill is put on the statute book as drafted, with the current commencement provisions in clause 30, the new financial guidance body might not be as effective as we would all have hoped. Ministers might want to address these concerns and reflect on whether the commencement provisions are still appropriate.

The first concern is whether the financial guidance body has access to sufficient data to help guide it on the allocation of the debt advice funding that will continue to be available as a result of the levy on banks. Unlike in the United States, we do not have in law a comprehensive requirement that banks and other lenders have to provide clear datasets to Government and regulators on where, and at what level, debt is being incurred. Therefore, one cannot track exactly where the most indebted parts of the country are.

I raise that concern because a number of years ago I had the opportunity to visit the estate of Thamesmead, which straddles the boroughs of Bexley and Greenwich. Thamesmead is an estate of about 55,000 houses, but it had no bank branch at all. As a result, the only lenders available were payday lenders and other high-cost providers of credit.

[The Chair]

Order. The hon. Gentleman appears to be speaking not to the amendment before us, but to one that has previously been debated. I remind all hon. Members that they must stick to the amendments before the Committee at this stage.

[Gareth Thomas]

I am grateful for your guidance, Mr Rosindell. I am concerned that we should not rush to commence the legislation until we have had an assurance that the new financial guidance body will have accurate data about which parts of the country have the highest levels of debt and the highest levels of cost. I am seeking to use this debate on clause 30 stand part to ask Ministers what confidence they have that the new body will be able, without further legal changes, to know where the most highly indebted parts of the country are, and therefore where the most debt advice funding should be allocated.

One of the great contrasts between this country and our great ally, the United States of America, is that there is provision in American law for banks, building societies and other lenders to have to report to bodies what they are lending and at what rate. Such a provision would allow the new financial guidance body to work out which areas might need a higher level of debt advice funding.

The second reason why I gently suggest that we should not rush to commence the Bill is that I believe the Minister should reflect—I gently press him to do so—on whether credit unions, which are a key tool for tackling the level of indebtedness in this country, have all the powers they need to support the new financial guidance body to take the necessary action to bring indebtedness down. Clearly, we want to ensure that there is still access to credit, but we want it to be affordable.

The third and final reason why I gently suggest Ministers should not rush to commence the Bill is that I believe they should check whether some of the worst, highest cost lenders, such as BrightHouse, pay an appropriate levy, under the provisions of previous Bills, to fund debt advice. It certainly seems to me—

[The Chair]

Order. The commencement clause does not give us the ability to discuss anything we wish to discuss. We need to stick clearly to the amendments before us, rather than using this as a way to discuss other matters.

[Gareth Thomas]

I am extremely grateful to you, Mr Rosindell, because you made your intervention just as I was drawing my remarks to an end. Given your great act of charity, I have made the three points I wanted to make, and I now look to the Minister to address my concerns.

[Guy Opperman]

That was undoubtedly the most ingenious way of creating a submission. I have to confess that, when I looked at the commencement order that I have to speak to, I did not expect to have to answer three specific points, but I hope I can give the hon. Gentleman a detailed answer. I assure him that if I fail in that task, I will give him a definitive answer next Monday, when we will meet to discuss these matters.

Let me take the hon. Gentleman’s points in reverse order. BrightHouse will be covered by the levy for the single financial guidance body. I believe that I will be able to give him more detail when I see him in 10 days’ time.

The hon. Gentleman will know that I founded and built up a credit union. I think I am the only MP to have been mad enough to do so—the grey hair I am rapidly acquiring is due to that mad endeavour, of which I am extremely proud. I am no longer specifically involved in it, but both I and my hon. Friend the Member for Salisbury are passionately committed to credit unions. We will review the nature of credit unions and how they are provided for statutorily under the Credit Unions Act 1979. I am happy to discuss that with the hon. Gentleman separately.

Let me make three points on access to data. First, the Money Advice Service already performs that service by creating a data bank and an information process by which it can judge the way ahead. Secondly, clause 18 specifically addresses requirements for the disclosure and interaction of data between the various bodies to ensure that the point the hon. Gentleman raised is addressed. Thirdly, with regard to the Bill as a whole, FCA work is also going on to obtain a quarterly dataset. Both the FCA and the Money Advice Service are doing that. I will happily reply in more detail to the three points that he rightly, and very ingeniously, put to me.

[Gareth Thomas]

I am grateful to the Minister for his generous response. Perhaps he would be willing to look kindly on a letter setting out some of the concerns about the dataset that is currently provided. I gently suggest that Ministers might engage with UK Finance to encourage the release of further data to help make that a more useful exercise.

[Guy Opperman]

I would be delighted to receive such a letter. I commend the Government amendments to the Committee.

Amendment 7 agreed to.

Amendments made: 8, in clause 29, page 25, line 37, at end insert—

“(3A) In section (Occupational pension schemes: requirements to recommend guidance etc)—

(a) subsections (1) to (5) extend to England and Wales and Scotland;

(b) subsections (6) to (9) extend to Northern Ireland.

(3B) Paragraph 25 of Schedule 3 extends to England and Wales and Scotland.”

New subsection (3A) updates the extent clause so that the amendments to the Pensions Schemes Act 1993 in NC2 extend only to England and Wales and Scotland and the amendments to the Pension Schemes (Northern Ireland) Act 1993 extend only to Northern Ireland. New subsection (3B) contains text previously in subsection (6) in consequence of restructuring this clause.

Amendment 9, in clause 29, page 25, line 38, leave out subsections (4) and (5) and insert—

“(4) Part 2, other than the provisions mentioned in subsections (5) and (5A), extends to England and Wales and Scotland.

(5) The following provisions extend to England and Wales—

(a) section24(12) and Schedule4;

(b) section27;

(c) section (PPI claims: interim restriction on charges imposed by legal practitioners after transfer of regulation to FCA).

(5A) Section (Cold calling about claims management services) extends to England and Wales, Scotland and Northern Ireland.”

This amends the extent clause, so that the new clause inserted by NC3 extends to England and Wales only, and the new clause inserted by NC6 extends to England and Wales, Scotland and Northern Ireland.

Amendment 10, in clause 29, page 25, line 42, leave out subsection (6) and insert—

“( ) This Part extends to England and Wales, Scotland and Northern Ireland.” —(Guy Opperman.)

This amendment contains a minor drafting change consequential upon the restructuring of the extent clause.

Clause 29, as amended, ordered to stand part of the Bill.

Clause 30

Commencement

Amendments made: 11, in clause 30, page 26, line 13, at end insert—

“(1A) Subsections (6) to (9) of section (Occupational pension schemes: requirements to recommend guidance etc) come into force on a day appointed by order made by the Department for Communities in Northern Ireland.

(1B) An order under subsection (1A) may make—

(a) transitional, transitory and saving provision in connection with the coming into force of any provision in section (Occupational pension schemes: requirements to recommend guidance etc)(6) to (9);

(b) incidental and supplementary provision, and

(c) different provision for different purposes,

and the power to make such an order is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).”

This amendment gives the power to bring into force the provisions amending the Pension Schemes (Northern Ireland) Act 1993 in the new clause inserted by NC2 to the Department for Communities in Northern Ireland.

Amendment 12, in clause 30, page 26, line 14, leave out “28” and insert “(PPI claims: interim restriction on charges imposed by legal practitioners after transfer of regulation to FCA)”

This amends the commencement clause, so that the new clause inserted by NC3 comes into force 2 months after Royal Assent.

Amendment 13, in clause 30, page 26, line 21, at end insert “except section (Occupational pension schemes: requirements to recommend guidance etc) (6) to (9)”

This amendment is consequential on amendment 11.

Amendment 14, in clause 30, page 26, line 29, at end insert “, and

(ii) section (Cold calling about claims management services)”

This amends the commencement clause to provide for NC6 about cold calling in relation to claims management services to be brought into force on a day appointed in regulations made by the Secretary of State.

Amendment 15, in clause 30, page 26, line 31, at end insert “, other than section (Cold calling about claims management services)”

This amendment is consequential on amendment 14.

Amendment 16, in clause 30, page 26, line 31, at end insert—

“( ) The Treasury must obtain the consent of the Lord Chancellor before making regulations under subsection (3) or (5) in relation to section (Legal services regulators’ rules: charges for claims management services).”—(Guy Opperman.)

This amendment requires the Treasury to obtain the consent of the Lord Chancellor before making regulations for the commencement of the new clause inserted by amendment NC4.

Clause 30, as amended, ordered to stand part of the Bill.

--- Later in debate ---

[John Glen]

Government new clause 6 is about cold calling made for the purposes of providing claims management services. As Members will be aware, that topic has been discussed at length during the passage of the Bill. The Government have listened to the debates closely and committed in the other place to table an amendment that would restrict cold calls made by claims management companies. The new clause makes good on that commitment.

Calls from claims management companies and other entities are not merely a source of irritation, but can result in extreme distress to those answering the calls, especially the most vulnerable in our society. As the Government have stated in previous debates, we have forced companies to display their calling line identification when they call. We have made it easier to prosecute those involved in making the calls by removing the threshold for financial penalties to be administered and we have strengthened the Information Commissioner’s powers for imposing fines on wrongdoers.

In addition, the claims management regulator and the Solicitors Regulation Authority have taken action against claims companies and solicitors that have breached tough direct marketing rules, including in relation to accepting illegally generated leads. However, we appreciate that we need to do more to truly eradicate the problem. New clause 6 seeks to ban cold calls made for the purposes of direct marketing in relation to claims management services, except where the person called has given prior consent to receiving such calls. The new clause will insert a provision into the Privacy and Electronic Communications (EC Directive) Regulations 2003, which govern unsolicited direct marketing.

The new clause will ensure that any call, whether it is from a claims management company, an individual or a lead generator, made for the purposes of direct marketing in relation to claims management services, is an unlawful call unless the receiver has explicitly consented to that call being made to them. The new clause takes the onus away from the individual to opt out of such calls being made to them—by signing up to the telephone preference service, for example—and puts the responsibility back on the organisation and its due diligence before making such calls.

There are complexities in legislating, including those related to navigating EU frameworks. However, the Government are convinced that the new clause will have the effect of making unwanted calls from claims management services unlawful.

[Gareth Thomas]

Is there not a concern that, having given consent to be phoned once, an individual might then be subject to a series of unwanted phone calls? One could imagine a situation in which an initial call is wanted by one of our constituents, but a company takes advantage of the permission to make a series of unwarranted further calls by arguing that it has the legal power to do so. What would happen in that situation?

[John Glen]

I will need to write to the hon. Gentleman on the mechanics of what can be done subsequently and how quickly and am happy to do so as quickly as possible.

[Gareth Thomas]

I apologise for intervening again, but I am thinking of an elderly constituent. One hears of scams and constituents being taken advantage of. How do we protect the individual who genuinely wants information and perhaps gives permission once, but then, perhaps because of their age or infirmity or whatever, they start to get taken advantage of? How do we prevent that?

[John Glen]

I am sorry that I cannot give the hon. Gentleman a full service response, but I will look into that issue carefully and keep in mind the specific circumstances he has described, which I will seek to address in my reply.

The new clause is another robust proposal to add to our package of measures to tackle unsolicited marketing calls. I hope they will be gratefully received by consumers across the UK.