Financial Guidance and Claims Bill [Lords]

Johnny Mercer Excerpts

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

[Yvonne Fovargue]

I rise to speak to my amendment 30, which would improve the timeframe for the breathing space, ensuring its introduction by the end of 2019. That would provide greater certainty, because the current timeframe centres on the establishment of the SFGB, which is potentially moveable. I have proposed a realistic target, allowing sufficient time for the necessary preparation work. I am assured of that by the debt advice providers themselves; they say it gives enough time to plan and develop the new systems to deliver the new protections to all.

Let us not forget that debt often pushes people into a mental health crisis and that debt and depression necessitate people visiting the doctors’ surgery. They are suffering depression, but it is not that; it is the debts that are depressing them. The breathing space and statutory debt repayment plans, properly set up, will give people time and space to get debt advice, stabilise their finances through periods of temporary difficulty and put in place a long-term sustainable solution to their debts. That is not just of benefit to the individual; it benefits the creditors as well, because they know they will be getting their money back, in a fair way, over a fair period of time.

I hope that the Minister will also confirm some details of how the breathing space scheme will work. As I have said on a number of occasions, it is essential that the length of time involved is sufficient to ensure that people are not put back into the harmful uncertainty of unmanageable debt before they have that long-term plan in place. Six weeks has been mentioned, and such a period may help some people, but I have said many times that three months is probably more realistic. I have mentioned how long it takes to get people to come in and deal with the debts, with the need to open carrier bags full of envelopes that people have not had the courage to open. If we are going to start with six weeks, provision must be made for extensions to be made to that; it cannot just finish at six weeks, as it often takes longer than that to get an appointment.

I would like to see this scheme cover all relevant debts, including benefit debts, council tax debts and debts owed to central or local government. If creditors are excluded, they will be able to put the unhelpful pressure on the debtors, which will reduce the scheme’s viability and effectiveness. This has to stop creditors across the board making unaffordable repayment demands. For example, claimants on universal credit can have 40% of their benefit withheld to pay off third-party creditors, with another 40% going on paying back benefit advances—that is 80% of the money. That leaves them with 20% of what is considered the minimum amount required to live on, and that is simply unaffordable.

There is widespread unfair pressure from Government creditors. As StepChange says, bailiffs are often the first port of call rather than a last resort. Clients rate the DWP, HMRC and councils far worse than other creditors—far worse than payday lenders—for treating them unfairly. The Government should adhere to best practice, and I hope that the Minister will agree that it is in all our interests to ensure that no vulnerable people are put into a position where they are unable to pay off their debts.

[Johnny Mercer (Plymouth, Moor View) (Con)]

I rise to speak in support of amendment 5, which is in my name and those of the hon. Members for Liverpool, Wavertree (Luciana Berger), and for North Norfolk (Norman Lamb), as well as many others across the House.

We in this place often talk a very good game when it comes to mental health, and serious progress has been made in taking the agenda forward over the last few years thanks to colleagues from across the House. When it comes to parity of physical and mental health, however, small details in policy matter. The amendment concerns one such detail, and I am delighted by what the Minister has said today about bringing that into reality for some of our most vulnerable constituents. It was a manifesto commitment of the Government to introduce a breathing space scheme, whereby people who suffer from problem debt are given a fixed period without fees, charges, interest or collection. The consultation is out at the moment, and I support the proposal very much, but there is a gap in provision for those who suffer from mental health crises—those who are too unwell either to manage their finances alone or seek debt advice, and so would not be able to access this scheme.

As we have heard, last year that situation affected up to 23,000 of our most vulnerable constituents, who were hospitalised for poor mental health while struggling with debt. That does not account for those who were in a similar position while receiving mental health crisis support in the community. The link between debt and poor mental health is indisputable; it is a marriage made in hell. I pay tribute to the work of Martin Lewis in bringing together the Money and Mental Health Policy Institute, which has shone a torch on the relationship between debt and mental health. That relationship is often hidden away in some of the darker recesses of our communities, but it makes some of our most vulnerable constituents’ lives hell.

Tens of thousands of people in this country are trapped in a spiral of escalating debts and worsening mental health. Some receive court summons while they are in hospital. I know somebody who faced demands on their doorstep the day they were released following their recovery from an illness. Some people have missed bill payments while hospitalised for mental health conditions, and escalating fees and charges have led some to attempt suicide directly after contact from bailiffs.

The ask of this amendment is very clear: for the Minister to look at extending the current breathing space scheme to apply to anyone who accesses psychiatric in-patient care. We must commit ourselves ever harder to parity of esteem, as I have said. For those who have a short period of acute mental illness—who suffer panic attacks and cannot open the post, call the bank or even think coherently—going to a debt counsellor to call a halt to things is just impossible. The commitment that we seek today, and that we have got from the Minister, is important because it means that people can look to those in NHS crisis teams for advice and space in the breathing space scheme.

I thank the Minister for his willingness to listen to our concerns. The campaign has been a good one. It has involved all Members of this House and shown what can happen when those from all parts of the House work together. I come back to what I said at the beginning. We often talk a very good game—I was delighted that parity of mental health and physical health was made a manifesto commitment in 2015—but sometimes big words have to be matched by calibrated and careful actions. This is one such area, and I am delighted that the Minister has decided that he is going to work on it. I look forward to working with him and the policy institute to make that a reality for tens of thousands of people up and down the country.

[Luciana Berger]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18

Disclosure of information

Amendments made: 12, page 14, line 17, after “where” insert “—

(i) the disclosure is for the purpose of enabling or facilitating the exercise of the consumer protection function, or

(ii) ”

This amendment is consequential upon Amendment 10, which makes changes to the consumer protection function, including requiring the SFGB to pass information to the FCA in certain circumstances. This amendment ensures that disclosure of information in these circumstances is protected by subsection (7) of Clause 18.

Amendment 43, page 14, line 26, leave out “Data Protection Act 1998” and insert “data protection legislation”—(John Glen.)

This amendment changes the reference to the Data Protection Act 1998 to a reference to the “data protection legislation” (as defined in Clause 25 as amended by Amendment 44) to reflect the changes to data protection legislation that are to be made by the Data Protection Bill.

Clause 19

Personal pension schemes: requirements to recommend guidance etc

Amendments made: 13, page 14, line 40, leave out from beginning to end of line 8 on page 15 and insert—

‘(1B) As part of the application process, the trustees or managers must ensure that—

(a) the member or survivor is referred to appropriate pensions guidance, and

(b) the member or survivor is provided with an explanation of the nature and purpose of such guidance.

(1C) Before proceeding with the application, the trustees or managers must ensure that the member or survivor has either received appropriate pensions guidance or has opted out of receiving such guidance.”

This amendment will enable FCA rules to require trustees of a personal pension scheme who receive an application from a member to access or transfer their pension to refer them to SFGB guidance and explain its nature and purpose (or ensure that another person, such as the SFGB, does so) and will prevent them from proceeding unless the member confirms that they have received guidance or do not want it.

Amendment 14, page 15, line 10, leave out from “guidance” to end of line 11.

This amendment (and Amendment 13) removes references to independent financial advice from Clause 19, so that it refers only to pensions guidance given by the SFGB in pursuance of Clause 5 of the Bill.

Amendment 15, page 15, line 14, at end insert—

“() make further provision about how, and to whom, a member or survivor may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (1C);”

This amendment expressly envisages the rules making provision about how the opt-out (or confirmation of receipt of guidance) mentioned in the new subsection (1C) inserted by Amendment 13 must be expressed in order to be effective.

Amendment 16, page 15, leave out line 17 and insert—

“communication that is made for the purposes of complying with the duty in subsection (1C)”. —(John Glen.)

This amendment is consequential on the changes to the duties on trustees made by Amendment 13.

Clause 20

Occupational pension schemes: requirements to recommend guidance etc

Amendments made: 17, page 16, line 10, leave out from beginning to end of line 23 and insert—

‘(2) As part of the application process, the trustees or managers must ensure that—

(a) the beneficiary is referred to appropriate pensions guidance, and

(b) the beneficiary is provided with an explanation of the nature and purpose of such guidance.

(3) Before proceeding with the application, the trustees or managers must ensure that the beneficiary has either received appropriate pensions guidance or has opted out of receiving such guidance.”

This amendment makes equivalent changes to Clause 20(2), which relates to occupational pension schemes in Great Britain, to the changes made by Amendment 13 for personal pension schemes.

Amendment 18, page 16, line 25, leave out from “guidance” to end of line 26.

This amendment is the equivalent to Amendment 14 for occupational pension schemes in Great Britain.

Amendment 19, page 16, line 29, at end insert—

“() make further provision about how, and to whom, a beneficiary may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (3);”

This amendment is the equivalent to Amendment 15 for occupational pension schemes in Great Britain.

Amendment 20, page 16, line 31, leave out from second “a” to end of line 32 and insert “communication that is made for the purposes of complying with the duty in subsection (3)”.

This amendment is the equivalent to Amendment 16 for occupational pension schemes in Great Britain.

Amendment 21, page 17, line 27, leave out from beginning to end of line 40 and insert—

‘(2) As part of the application process, the trustees or managers must ensure that—

(a) the beneficiary is referred to appropriate pensions guidance, and

(b) the beneficiary is provided with an explanation of the nature and purpose of such guidance.

(3) Before proceeding with the application, the trustees or managers must ensure that the beneficiary has either received appropriate pensions guidance or has opted out of receiving such guidance.”

This amendment makes equivalent changes to Amendments 13 and 17 for occupational pension schemes in Northern Ireland.

Amendment 22, page 17, line 42, leave out from “guidance” to end of line 43.

This amendment is the equivalent to Amendments 14 and 18 for occupational pension schemes in Northern Ireland.

Amendment 23, page 17, line 46, at end insert—

“() make further provision about how, and to whom, a beneficiary may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (3);”

This amendment is the equivalent to Amendments 15 and 19 for occupational pension schemes in Northern Ireland.

Amendment 24, page 18, line 2, leave out from second “a” to end of line 3 and insert—

“communication that is made for the purposes of complying with the duty in subsection (3)”. —(John Glen.)

This amendment is the equivalent to Amendments 16 and 20 for occupational pension schemes in Northern Ireland.

Ordered,

That Clause 22 be transferred to the beginning of line 1 on page 21.—(John Glen.)

This is a drafting change to reorder some of the existing clauses in the Bill to provide a more logical order following the insertion of NC3 and NC4.





Clause 25

Interpretation of Part 1

Amendments made: 25, page 21, line 2, at end insert—

“the ‘consumer protection function’ has the meaning given in section 3(7);”

This amendment inserts a definition of “the consumer protection function” into the interpretation clause, which will be necessary following the amendment to Clause 18 made by Amendment 12, which refers to the consumer protection function.

Amendment 44, page 21, line 2, at end insert—

“the ‘data protection legislation’ has the same meaning as in the Data

Protection Act 2018 (see section 3 of that Act);”

This amendment inserts a definition of the “data protection legislation” which is a term now used in Clause 18 (see Amendment 43) and the new clause inserted by NC9, to reflect the changes to be made to the law in this area by the Data Protection Bill.

Amendment 26, page 21, line 7, at end insert—

“‘direct marketing’ means the communication (by whatever means) of advertising or marketing material which is directed to particular individuals;” .—(John Glen.)

This amendment inserts a definition of “direct marketing” into the interpretation clause (using the definition in data protection legislation), which is a term used in the consumer protection function (see Amendment 10) and in NC3 and NC4.

Clause 36

Commencement

Amendments made: 45, page 35, line 6, at end insert—

“() section (Unsolicited direct marketing: pensions);”

This amendment amends the commencement clause so that the new clause on unsolicited direct marketing relating to pensions (inserted by NC9) would come into force on Royal Assent.

Amendment 46, page 35, line 25, after “Sections” insert—

“(Unsolicited direct marketing: other consumer financial products etc) and”.—(John Glen.)

This amendment amends the commencement clause so that the new clause on unsolicited direct marketing relating to consumer financial products other than pensions would come into force automatically two months after Royal Assent.

Schedule 4

regulation of Claims Management Services: Transfer Schemes

Amendments made: 47, page 47, line 17, at end insert—

“‘the data protection legislation’ has the same meaning as in the Data

Protection Act 2018 (see section 3 of that Act);”

This amendment inserts a definition of “the data protection legislation”, which is a term now used in paragraph 19 of this Schedule (as amended by Amendment 48) to reflect the changes made by the Data Protection Bill.

Amendment 48, page 49, line 32, leave out “Data Protection Act 1998” and insert “data protection legislation”.—(John Glen.)

This amendment changes the reference to the Data Protection Act 1998 to a reference to the “data protection legislation” to reflect the changes to data protection legislation that are to be made by the Data Protection Bill.

Title

Amendments made: 28, line 2 leave out “cold-calling and”.

This amendment, together with Amendment 29, amends the long title in consequence of NC3 and NC4.

Amendment 29, line 3 at end insert—

“to provide a power to make regulations prohibiting unsolicited direct marketing in relation to pensions and other consumer financial products and services;”.—(John Glen.)

See explanatory statement for amendment 28.