Financial Services Bill

Lord Caine Excerpts

Committee stage & Lords Hansard
Wednesday 3rd March 2021 Grand Committee

I hope that this response has provided noble Lords with sufficient reassurance not only on the significant action taken by the Government on the issues raised, but on the future work underway to take these further. I therefore hope that the noble Lord, Lord Eatwell, feels able to withdraw his amendment and that other noble Lords do not move theirs.

[The Deputy Chairman of Committees (Lord Caine) (Con)]

My Lords, I have received a request to speak after the Minister from the noble Lord, Lord Sikka, and the noble Baroness, Lady Bowles of Berkhamsted. I call the noble Lord, Lord Sikka.

[Lord Sikka (Lab) [V]]

The group of amendments which we just discussed focused primarily on economic crime. Matters such as tax avoidance and tax evasion have also been mentioned, which are often the domain of the accounting law firms, banks and others. The noble Baroness, Lady Noakes, is absolutely right in that accountancy trade associations, such as the Institute of Chartered Accountants, also carry out a variety of other regulatory functions; but the question is how well such functions are actually carried out. There have been a number of court cases brought, by HMRC, where the judges have held that the tax avoidance schemes were unlawful. I hope the Minister can help us by telling us whether, after those court judgments, even one big accountancy firm has been investigated, fined or disciplined by the Institute of Chartered Accountants or any other accountancy trade association. Even one example from the past 10, 20, 30, 40, 50 or 100 years will do.

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[Lord Holmes of Richmond (Con) [V]]

My Lords, it is a pleasure to take part in the debate on this second group of amendments. I declare my interests as set out in the register. It is also more than a pleasure to follow the noble Baroness, Lady Coussins, and the elegant way in which she introduced the amendments. I would certainly have added my name to her Amendment 67 had I had any ink left in my pen. I can only express regret that my name is not on it, as it elegantly and excellently expresses her intention, as she has done on her feet today.

In many ways, this is the most important group of amendments that we are considering in Committee. It takes me back to 2017, when we debated the Financial Guidance and Claims Bill, as it was then, and our discussions about duty of care and financial inclusion. It all rings true in these amendments and in our earlier discussions in Committee on financial inclusion objectives, not least for the Financial Conduct Authority.

I am grateful to the Money Advice Trust, Macmillan and StepChange not just for their briefing, advice and commentary for these amendments but for the work that they and all the organisations involved in the debt space do day in, day out—often unsung—dealing with people who find themselves in some of the starkest situations. Those organisations step in, and they deserve our thanks, praise and recognition.

I shall cover Amendments 53, 68, 69 and 111 in my name. I shall also touch briefly on Amendments 54 and 70 in the name of my friend, the noble Lord, Lord Stevenson, but I shall be mindful not to eat his tea. I feel somewhat nervous speaking before him, with all the expertise he has in this area and in view of his excellent chairmanship of StepChange. This Committee and our nation owe him a tremendous debt for the work that he has done in the area of debt.

Amendment 53 is relatively straightforward. It focuses on the provision of debt advice for those who would fall within the scheme. It hints at the wider point of financial education, not just in schools, as we have discussed in the past, but broadly, throughout life. It was not possible to craft an amendment to the Bill on financial education the way I would have intended. However, I believe that Amendment 53 speaks to that specific intention while having general applicability, broader than just those within the scheme.

Amendment 54, in the name of my friend the noble Lord, Lord Stevenson, is an excellent probing amendment, and I shall leave him to walk us through it. Amendment 68 has elements of Amendment 67, in the name of the noble Baroness, Lady Coussins. It sets out the provisions of the SD scheme and a timetable for its implementation. I am not entirely sure why I opted for December 2024 as the end date for when people would have to have been taken up into the scheme. I may have had the view that the Johnson Administration would go the full five-year distance. On balance, I am probably minded to go with the noble Baroness, Lady Coussins. May is probably a better date; it is certainly reasonable and achievable and gives the right amount of space, with the right amount of road, to enable this scheme to get up and running.

Amendment 69 seeks a consultation on how funding for advice will operate under the scheme and is relatively straightforward. Amendment 70 is, without question, one of the key amendments in this group. It was handsomely set out and I will not eat my friend’s lunch in doing so again. By setting out particular groups, not least SMEs, those with protected characteristics and charities, the noble Lord has done an excellent job in focusing on the key groups and on how such a review should be structured.

Amendment 111, my final one in this group, is concerned with so-called lead generators. In many ways, it goes to the essence of the human condition: the ebb and flow; the give and the take. What we witness with lead generators is, all too often, those taking from those who have the least. The aim of the amendment is straightforward: to end the misery and mental stress that the practice of lead generation, as currently conducted, causes to tens of thousands across the UK. What are lead generators? In essence, they use online tools to crawl the online world in search of those who have entered that environment to try and find solutions to their current debt difficulties. They then serve up the individuals they have captured, if you will, to organisations which seek to “advise” and “help” them. This area is riddled with misleading statements, misrepresentation—

[The Deputy Chairman of Committees (Lord Caine) (Con)]

The Committee will now adjourn for five minutes.

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[The Deputy Chairman of Committees (Lord Caine) (Con)]

My Lords, before I invite the noble Lord, Lord Holmes, to complete his comments, I point out that I completely omitted to put the question when the noble Baroness, Lady Coussins, moved her amendment. For clarity, the question before the Committee is that Amendment 52 be agreed to. I call the noble Lord, Lord Holmes of Richmond.

[Lord Holmes of Richmond (Con) [V]]

As I was saying, lead generators are involved in misleading and misrepresentation by holding themselves out as organisations such as the Money Advice Trust or StepChange, or representing themselves as government to pull in for financial gain those who sought help for their debt difficulties. It is a pernicious practice, preying on those who are, without doubt, extremely vulnerable as a result of debt. It is unfortunate that the arena for their taking is the world wide web—one of the greatest gifts to humanity from one of the greatest of great Britons, Tim Berners-Lee. It is such a tragedy that his world is populated by these tawdry takers.

Amendment 111 would amend the FSMA to bring lead generators into the world of regulation to end this pernicious practice and to address the current asymmetry in FCA regulation: if you are introducing creditors that is a regulated activity; if you are introducing a debt advice service or the like, that is currently unregulated. The problem is large: StepChange and the Money Advice Trust estimate that at least 10% of those in need who seek their help and that of other debt advice services are caught up in and misdirected by such lead generating practice. That is an extraordinarily high figure.

We often see the world in a grain of sand when we consider personal testimony. One man said: “I am caught up in this world of these people. I am called, if not once, five times a day. Fortunately, I’ve managed to sort out my debt problems, but this harassment from these organisations is almost as bad as the debt itself. It’s having a detrimental effect on my life; it’s having a detrimental effect on my mental well-being.” That is the outcome of this mendacious practice, of this fakery and falsehood, from these tricksters and takers.

When my noble friend the Minister considers Amendment 111, would he agree that when individuals look for support in their hour of need as a result of a debt situation, they should find help, not harm? I am delighted that the amendment has the number 111; it is a single Nelson of an amendment. It is a single amendment with a single intention: for it to pass to make one single, simple change that will help hundreds of thousands. Will my noble friend the Minister channel his inner Nelson and give Amendment 111 its victory?

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I declare my interest as a former chair of StepChange Debt Charity. I thank the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes, for their kind words about the work we have done with StepChange and all the other groups involved in supporting the repayment of debt and the management of unmanageable debt. It has been a pleasure to work with them and I have listened to their words very carefully, but it has also been wonderful, over the years I have been working on this issue in your Lordships’ House, to see the number of people who have become interested in it and who are prepared to join in and support it grow. It is now a very solid group with very firm views about how things should move forward, as we just heard.

I was very struck by what the noble Lord, Lord Holmes, said about the way people prey on those who have problems with debt. When I was working at StepChange we decided to change the name from the rather uncomfortable Foundation for Credit Counselling, which no one ever used. It was not a foundation, we did not deal with credit, and we did not counsel. It was a problem to get across what we did do, but we decided to be bold, as one is when coming to a new organisation and thinking about how you might change it. We decided to go for a name that took us away from any descriptive elements, and came up with StepChange.

One thing that we did not expect, which plays back to what the noble Lord, Lord Holmes, said, was that within 24 hours of our name being announced to the world there were between 15 and 20 groups preying on the same group of people we were trying to help, in exactly the way that the noble Lord described: they had changed their names to variations on StepChange. They also changed their colour coding, the whole look of their websites and the whole way that they approached potential customers. It was a wonderful example of the difficult area in which we operated. Here we were, trying to help people who were desperate to repay the debt that they had got themselves into. They were, by and large, decent, ordinary people for whom something had gone wrong with their lives and as a result they were spiralling into unmanageable debt. Yet here were these other companies trying to make money out of them, as the noble Lord explained. It was just awful, and to do so in a way that showed that they were watching how we operated in the market and were prepared to copy our techniques to get people to pay them money which they could not afford in order to get out of debt, was an extraordinary basis.

That leads into the amendments in this group, which are largely about trying to work with the Government in their good and well-thought-through plans, which are slowly coming to fruition. Perhaps they could go a little faster, but that is part of this discussion. My principal point is that I want us to support what the Government are doing because they are on the right track. We would like to do anything that we can to help them.

I have two amendments in this group and would have signed others, but I did not need to because they have a lot of support in other areas. Amendment 54 probes the nature and content of the regulations that will establish the statutory debt management scheme, which is complementary to and foreshadowed by the debt respite scheme mentioned by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes of Richmond. Amendment 70 calls for a formal review of the debt respite and statutory debt management schemes within a two-year period after Royal Assent. It looks very straightforward on the surface but when the Minister responds I am sure that he will realise where the amendment is trying to take him. It has the same impact as the points made by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes, which is that we are a bit worried about the time that it has taken to get this scheme going. The idea was—

[The Deputy Chairman of Committees (Lord Caine) (Con)]

My Lords, as there is a Division in the Chamber, the Committee will adjourn for five minutes.

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[The Deputy Chairman of Committees (Lord Caine) (Con)]

My Lords, the Committee will now resume.