Financial Services and Markets Bill

Lord Davies of Brixton Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I should mention that I am a fellow of the Institute and Faculty of Actuaries and, in one way or another, have worked in the financial services industry throughout my professional career, albeit generally on behalf of consumers.

The Bill is in effect a Brexit Bill, as emphasised by the two previous speakers, but the Government are taking the opportunity to pursue wide-ranging changes in the way the industry is regulated. This has led to the concerns which have been expressed and will be expressed subsequently in the debate. For my part, my main concern is to ensure, given any changes, that the interests of consumers are fully protected. The industry owes a duty of care to consumers, and how this should be implemented needs to be set out clearly and directly in the Bill.

Against that background, I want to highlight one aspect of providing care for consumers where more needs to be done. Mental health and financial circumstances are clearly linked. Problems with your mental health can make it harder to earn money, to manage spending and, crucially in the context of financial services, to get a fair deal on products and services. Facing financial difficulties should not result in needing mental health treatment, but too often those things come hand in hand. Financial difficulty itself causes stress and anxiety, but this is often made worse by, for example, collections activity or having to go without essentials. It is important, therefore, to understand the scale of the problem. In any given year, one in four people will experience a mental health problem, and the pandemic and the cost of living crisis have made things worse.

Common symptoms of mental health problems, such as low motivation, unreliable memory, limited concentration and reduced planning and problem-solving abilities, can make managing money significantly harder. Those symptoms can also make it more difficult to interact with financial services. For example, four in 10 people say that they find it difficult or distressing to make phone calls. Experiencing a mental health problem can also make people more vulnerable to fraud and scams. People with mental health problems are three times more likely to report that they have been the victim of an online scam than other people.

The relevance of all this to the Bill is that the financial services industry needs to be placed under an explicit obligation to act responsibly towards its customers who have mental health problems. The industry needs to recognise and understand the nature and scale of these problems, it should be placed under a duty of care towards its customers, and it should be required to take active steps that will minimise the potential difficulties faced by those who have or are at risk of having mental health problems that are associated with their finances. Obviously, this will be of benefit to the individuals concerned, but it will also relieve much of the pressure on our mental health services, and, finally, it will be of benefit to the financial services industry itself in not accumulating bad business.