Bank of England and Financial Services Bill [HL]

Lord Harris of Haringey Excerpts

Tuesday 3rd May 2016 Lords Chamber

[Lord Bridges of Headley]

My Lords, this amendment gives the Treasury a power to provide financial assistance to bodies for the purpose of taking action against illegal money lending. It also gives the FCA an obligation to raise a levy, which will apply to consumer credit firms, in order to fund this financial assistance.

Loan sharks prey on some of the most vulnerable people in society, cause untold misery to their victims and have a damaging impact on the communities in which they operate. As well as lending money illegally at high levels of interest without FCA authorisation, loan sharks frequently use blackmail, as well as violence, to intimidate their victims into repaying legally unenforceable debts.

Loan sharks are currently investigated and prosecuted by the England and Wales illegal money lending teams and the Scottish Illegal Money Lending Unit. The cost of the teams is around £4.7 million. While the FCA will consult on precisely how the levy will be apportioned and collected in its annual fees consultation, the cost of the new levy to individual firms in the £200 billion consumer credit market is anticipated to be small.

It is absolutely right that industry meets the modest costs of funding the teams—all participants in the consumer credit market benefit from their enforcement work. The teams ensure that the consumer credit market remains legitimate and credible by keeping illegal money lenders out of it. The amendment will ensure that the funding that the illegal money lending teams need to continue their crucial work is put on a sustainable, long-term footing. I beg to move.

[Lord Harris of Haringey (Lab)]

My Lords, I declare my interest as chair of the National Trading Standards board and welcome this government amendment to put the funding of the illegal money lending teams on a stable footing. As the Minister said, the teams do an enormous amount of extremely important and valuable work. A recent prosecution dealt with an individual who was charging those unfortunates whom he was offering allegedly to help interest rates of 400,000% per annum. Figures I have for England and Wales show that the work of the illegal money lending teams has led to the writing-off of debts in excess of £55 million. So the work is value for money and extremely important. It is quite right that the funding of these teams should now be put on a long-term, sustainable footing and it is entirely proper that the legitimate part of the lending industry should make sure that those who operate illegally and prey on people who are in a state of considerable distress are dealt with appropriately.

[Lord Sharkey]

My Lords, this is a very good amendment and we support it. Until now, funding for action against illegal money lending has come mostly from BIS with occasional help from the Treasury reserve. As Harriet Baldwin noted in the Commons committee, this funding was constantly being questioned in spending reviews and she rightly saw the need to protect it from the depredations of Chief Secretaries. This amendment does that by changing the funding mechanism to a levy on consumer credit firms. These firms benefit from being within a robustly enforced perimeter and we welcome this change. We welcome the move to provide sustainable and stable funding for the fight against illegal money lending.