Financial Services Bill

Lord Hodgson of Astley Abbotts Excerpts

Wednesday 28th November 2012 Lords Chamber

[Lord Ramsbotham]

My Lords, I support the noble Lord, Lord Mitchell, and all those who put their names to the amendment. I hope very much that another government ministry will support this amendment—the Ministry of Justice. Nowhere is the misery caused by these loan sharks felt more keenly than by the prison population and their families. The damage done to potential rehabilitation suggests to me that if the MoJ is serious about the “rehabilitation revolution” that it commends, it should support the amendment to the hilt.

[Lord Hodgson of Astley Abbotts]

My Lords, it is greatly to the credit of the noble Lord, Lord Mitchell, that he has not ducked the challenge of balancing the accessibility and availability of credit with its affordability and the terms on which it is made available. A number of noble Lords have made it clear, as indeed has the noble Baroness, that the availability and accessibility of credit is important. My noble friend on the Front Bench made a powerful intervention; he indicated a number of ways in which the amendment could be got around because of the gaps in it. It is important that we get this right and make it bullet-proof. For example, some of his thoughts about—if I heard him right—making a contract unenforceable under certain circumstances would add a great deal of power to this. I hope very much that we will be able to have a period of reflection and ensure that the unintended consequences that could come about, as evidenced by my noble friend’s speech, are avoided and we get something that stands the test of time.

[Lord Barnett]

My Lords, I have a couple of points. Throughout the Bill, my noble friend Lord Peston and I have constantly raised the question of “may” and “must”. That question arises in this amendment, too. The amendment, moved so wonderfully by my noble friend, states:

“The FCA may make rules”.

That could be “must” because the amendment is already constrained by the end of that sentence,

“on terms that the FCA judge to cause consumer detriment”.

That is why it is so important, as my noble friend Lord Peston said, that we see the Minister’s amendment as soon as possible. I am not a lawyer but I do not distrust them; however, the lawyers who advise Governments can make mistakes, which are usually resolved by lawyers on both sides eventually having an argument, at great cost to everyone including the courts, until someone decides in court who was right. On this occasion we have to try to get it absolutely right. I regard what the Minister said as very helpful.

My noble friend said that we must see the amendments as soon as possible. However, nothing is built in stone. No law states that we have to have Third Reading next Wednesday. If necessary it could be delayed a little. The important thing is to get it right. I hope that the noble Lord, Lord Sassoon, will consider having a discussion with the authorities, or with the Leader of the House or whoever, about whether, if we do not get sight of the amendments as soon as possible, we should delay Third Reading until we are sure that we have got it right. That is crucial. I hope that the noble Lord, Lord Sassoon, can inform us that he will do that.

--- Later in debate ---

[Baroness Hayter of Kentish Town]

My Lords, my noble friends Lord Mitchell, Lord Peston, Lord Barnett and Lord Davies of Oldham have all had the opportunity to thank the Minister today for hearing their arguments and meeting them. Perhaps it is now time for the Minister to do the same for one of his own side, and accept these arguments from his noble friend Lord Flight. The noble Lord, Lord Flight, is right on this: consumers will only be able to drive competition if they can swiftly, easily and cheaply change bank accounts. Without that, there really will be no way to drive up standards.

It was interesting to hear the noble Viscount, Lord Trenchard, talk about phone calls and automatic voice recognition. It reminds me of a wonderful publication produced by the National Consumer Council called The Stupid Company. This asked a whole lot of consumers, not just in financial services, “What are the things you most hate about companies?” In the top three was automatic voice recognition. It was really interesting that when that was played back to companies, they continued to use it although they knew that it was the thing their consumers most hated. Banks are like that. Until people can change banks easily, I fear that they will continue to do things that none of us likes. I hope very much, therefore, that the Minister can send Lord Flight home happy this evening by having accepted his amendment.

[Lord Hodgson of Astley Abbotts]

The noble Baroness leapt to her feet very quickly. I know that the House is like a horse running for the stables, and I will not detain the House long. I support my noble friend’s amendment. As regards money-laundering and transferability, I would like to pick up a point made by the noble Lord, Lord Newby, in replying to the debate on 24 October, when he talked about the transferability of direct debits and how that works as regards the Payments Council initiative.

I am afraid that this again involves the charity sector. There is general agreement that there are far too many charities and that many ought to be closed down. There are many thousands of shell charities, which are the result of mergers. There has been a perfectly proper merger and there was no problem as the Charity Commission, the trustees and the lawyers were all happy with it. However, when you ask why this shell charity remains, it is because the banks will not accept the transfer of standing orders and direct debits to the new, enlarged charity. The charity then has to go through the process of asking every single direct debit and standing order signatory to re-sign. Administratively, that is an extremely complicated process and many of course decline to do so.

I am not asking my noble friend to reply tonight but I say this in the hope—it is probably a forlorn hope—that the Payments Council is listening to this debate and might therefore see whether it can find some way to enable this administrative inefficiency to be dealt with. That would enable some of these shell charities, which no longer need to exist and exist only to collect direct debits and standing orders, somehow to be subsumed into the new charity of which they are now a part.

[Baroness Kramer]

My Lords, I will intervene only for a moment but in case the Government are unable to meet the hopes of the noble Lord, Lord Flight, and others today perhaps I might say that I chair the sub-panel of the Parliamentary Commission on Banking Standards which is looking at competition in retail banking. Account portability is a significant part of that and the staff are now on the alert to take the report of the comments made today in Hansard and make sure that it and the amendments are put before the panel’s next meeting