Financial Services and Markets Bill

Lord Hunt of Kings Heath Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, I support the general thrust of the amendments on access to cash and the availability of real banks, if I can put it that way. I take the point of the noble Baroness, Lady Noakes, that the future is digital and that our effort should be to incentivise the financial sector to make it easier for those people who, at the moment, lack the confidence to use digital methods. I accept that she is right, up to a point; we probably are moving to a cashless society. So far, however, the financial sector has shown itself to be rather backward in coming forward with innovative solutions for people who lack confidence.

Secondly, there is enough evidence around to suggest that, at the moment, enough people—millions of people—use cash. They often use cash as a way of budgeting at a very difficult time. I would be loath for us to take action that disenables them from doing so. One of the concerns about access to cash is not just that the number of machines is being reduced but that the amount of free access to cash is, I understand, also reducing. Some of this is to do with the way that fees are charged by the LINK facility. I will not put the noble Lord, Lord Hunt of Wirral, on the spot, but there are issues around the way in which that policy has developed over the past few years, as it seems to be putting pressure on some of the cash providers. This, again, needs to be looked at.

I was very struck by an article in the Guardian today about a 91 year-old who

“discovered that her pension and benefits payments had been stopped and her direct debits cancelled after a Barclays agent recorded that she had died and closed her account.”

I realise that hard cases cause bad law but her experience brought home to me many of the problems that are being faced. She

“informed Barclays that her husband had died. She asked for his name to be removed from their joint account and replaced with that of her daughter … who has third-party access to her account. Instead, she was marked as deceased and the account was closed. Her pension and benefit payments were returned to the Department for Work and Pensions and her direct debits were stopped. She discovered the mistake when she returned from a family Christmas to find her phone line and energy supply had been cut off and a sheaf of letters from companies and the council demanding payment.”

The article continues, as she then

“made two trips to her nearest Barclays branch and was told on both occasions by staff that she was recorded as dead. The bank refused to discuss the case with her daughter because her third-party authority had been revoked when the account was closed.”

This recalls the experience of my wife and I, who had power of attorney for our parents. Once they have died, you lose that power of attorney; it becomes very difficult to have any interaction with the bank at all, and the bank itself is often unsympathetic when you try to discuss this.

In Mrs Roper’s case, the account was eventually reopened and the payments restored after intervention by the Guardian. However, as the article states:

“Roper’s ordeal highlights the obstacles facing vulnerable customers who do not have access to online banking. A Barclays customer for 65 years, she is unable to cope with the automated menus on the customer service phone line and, since her local branch closed, she is forced to take two buses to the next town to withdraw money and manage her account. The only available appointment to request the account change was at a branch 23 miles away where staff did not know her. She brought the required documents, but the bank refused to proceed with the requested name change because she could not recall her little-used pin number. She was told her to make another appointment when she had remembered her pin.”


I am afraid that this is all too common. When we talk about encouraging people to use online facilities, I recall my mother in her last year or so. She was very frail. Even using phones with big numbers, not smartphones, became very difficult. With banks and other financial services, we know who the policy people are; they are often the same young people who work in government developing policy. I accept that the noble Baroness, Lady Noakes, is right about where we are going as technology moves on. However, we are talking about forgotten millions of people here. So far, because I do not see the financial sector responding, we need some safeguards in the Bill. Before Report, I hope that we can coalesce around one amendment that will really enable us to ensure that there are strong responsibilities on the regulator to encourage best practice here.

[Baroness Twycross (Lab)]

My Lords, I want to speak to my Amendments 185 and 188 in particular, as well as on the broader points made by other amendments in relation to access to cash and basic banking services. I declare an interest as London’s Deputy Mayor for Fire and Resilience and the chair of the London Resilience Forum, not least because the London City Resilience Strategy highlights the risk of moving to a cashless society.

First, Amendment 188 concerns the importance of cash to national resilience. It is of critical importance that the Government have due regard to what might happen in some crisis situations were we to become an entirely, or almost entirely, cashless society. Comment has been made on the march towards a cashless society in Scandinavian countries, including by the noble Viscount, Lord Trenchard, but we should also note that these countries have not only greater equality and lower financial exclusion than the UK but, in formal government guidance to their populations on preparedness, they recommend that their citizens have some cash for use in an emergency.

The Norwegian Government’s English language public information leaflet on personal preparedness says:

“Most of us are completely dependent on electricity in our everyday lives: for heating, light, cooking, hot water and running electrical appliances and devices. Storms, natural disasters, sabotage, technical problems, terrorism or acts of war can result in many people’s electricity or water supply being cut off.”


The digital world in which we live, which is reliant on electricity, creates huge risks as well as opportunities. The world is in many ways less resilient to shock than it was previously as a result. You only have to look to the recent cyber incident that Royal Mail experienced, with weeks of not being able to send international post, to understand the real risks of a world in which individuals, companies, sectors and countries become overly reliant on digital finance and digital infrastructure.

On a national basis, everything from a major power outage to a rota power outage—your Lordships will know that local resilience forums were asked to plan for one this winter so this is not a hypothetical situation—whether this is through shortages, hostile cyberattacks or a major storm, could restrict the ability of individuals, businesses and government to function. I agree with the noble Lord, Lord Holmes, that access to cash should be viewed as part of the national critical infrastructure.

The scenarios in which an overreliance on digital banking, with an absence of cash as a back-up, becomes an additional complication or risk in an emergency situation are not far-fetched. This is a genuine threat to our country’s resilience and to our national security in an unstable world. I therefore ask Ministers to consider including this amendment and would suggest that, as a minimum, the ongoing work that the Government are undertaking on the national risk register considers what additional risks might emerge in relation to emergency situations in which cash was no longer available.

There is limited reference to this issue online. In my attempt to get more extensive examples or comments to back up my points, I did not find much of note to cite relating to the UK. This actually made me more concerned, not less. The reality is that it is not far-fetched to have a scenario in which we could lose access to digital finance or payments systems for a number of days—or weeks—on a national, regional or sub-regional basis. The reason cash has lasted so long is that it is, in essence, resilient. That is not the only reason for keeping cash but we need, as a country, to avoid sleepwalking into losing the resilience that it can provide. If you spoke to people working on resilience in Sweden, for example, I think they would also note that it presents additional problems. This is not about preserving history, as the noble Baroness, Lady Noakes, suggests, but about preserving our resilience.

Amendment 185 in my name, which is on the regional experience of cash provision, is intended to highlight the need for us to understand and plan, through the FCA, for cash provision—not just on average, or on the whole, but in relation to whether provision has a regional and potentially sub-regional imbalance. This would enable any regional disproportionality that exists to be addressed. I am particularly concerned that we have large areas, both rural and within cities, that no longer have banks. I know, for example, that the entire constituency of Bradford South no longer has a bank. Like others, I am particularly concerned about the risks of there being a lack of cash and basic banking services for the most vulnerable in society. Others have already spoken on this point and given detailed statistics illustrating it, so I will not dwell on it.

In conclusion, I commend those noble Lords who have tabled specific amendments covering free access to cash and access to basic banking services. It is not a coincidence that Amendment 182 has cross-party sponsors and I commend my noble friend Lord Tunnicliffe, the noble Lord, Lord Naseby, and the noble Baronesses, Lady Tyler and Lady Altmann, for their work on it. I also commend those in the other place, particularly the honourable Member for Mitcham and Morden, who have pushed for this matter to be addressed. Quite simply, free access to cash and basic banking services must be guaranteed. At the heart of British personal banking lies free access to your own money. It is outrageous that if you are poor, you are more likely to have to rely on charged-for cash machines. This legislation provides an opportunity to address the issue, as well as ensuring that we safeguard our country’s resilience.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, surely we have a situation in which the market is failing. In essence, the banks are not interested because they take the same view as that of the noble Baroness, Lady Noakes: that this part of the market is dying. They do not want to be involved because they want to be in a dynamic, new market. Faced with that and the 7 million people who use cash each year—in the current cost of living crisis that many people face, cash is used as a budgetary tool—what can we do if the market is clearly not providing? From our point of view, legislation is the only lever we have because none of the regulators seems that interested. Government departments are not; they are engaged in removing cash as much as possible. What is the alternative?

[Baroness Lawlor (Con)]

I thank the noble Lord for his intervention. I do not have an answer—I am sorry to disappoint the noble Lord—but this Bill is not the place for that. Its aims and purposes are to make the UK sector more nimble and competitive internationally so that it can move ahead in a post-Brexit world and we can all benefit from a successful financial sector. Putting caveats, restrictions and obligations on a sector can add costs to customers, consumers and all who use these services. However, I think that that is a good aim and is good to do. We should have a special committee to see how we can encourage use, short of using the law as a big stick on one sector of providers. There are many ways that have opened up in the market that are already providing use, which I can discuss later.

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, there are a number of ways to tackle the issues that the noble Lord referred to. There are various statistics around payment methods used by consumers in the UK; I quoted some at the start of my speech. The Government have not mandated service providers to accept certain forms of payment; that is not the approach we intend to take to ensure that people continue to have access to cash or money. I have said that, in supporting businesses’ access to deposit services, that will support people’s ability to use their cash as a form of payment.

The noble Lord also raised the question of a digital form of money. That is a question that the Government have looked at very carefully. We launched what I think was a joint consultation between the Government and the regulators, looking in more detail at the question of a central government digital currency and how to take forward that work, as well as considering questions such as those from the noble Baroness, Lady Fox, about privacy issues in a world of having a digital form of money versus having cash as a form of money.

I understand the importance of having a picture and the data that allows us to understand what is going on. I do not think that the data is necessarily the gap here; it is about how you provide for the ongoing use of cash in a society where rapid changes are being made. Our approach to that has been through legislating in this Bill on access to cash withdrawal and deposit facilities.

I was just talking about the importance of the accessibility of payment interfaces, including ATMs and point-of-sale terminals. I am pleased that UK Finance and the RNIB have developed accessibility guidelines for touch screen chip and PIN devices, as well as an approved list of accessible card terminals. The Government’s disability and access ambassador for banking, Kathryn Townsend, also encourages a consistent consumer experience and engagement with deaf advocacy groups.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I do not want to delay the Committee or the Minister but, on ATMs, I referred rather incoherently to the interchange fee paid by LINK. Will the Minister take back the issue that this is having a big impact on the viability of providing free cash by the companies that do so? This partly seems to be down to the ownership of LINK and the influence of banks in relation to it, but does she accept that there can be very profound effects when you lose free access to cash and have to pay for it? I was told this morning at a meeting with NoteMachine —one of the companies that provide cash—that six out of 10 withdrawals are for £10 because people are using it to budget. The problem is, if you no longer have access to free cash, you then have to pay £1.50 for it. That is a huge rate. These are some of the practical issues that I hope the Minister will be prepared to take away between now and Report.

Even accepting that the Minister may not be prepared to accept any of these amendments, it seems that at the moment we do not, despite FCA guidance, have a guarantee that the financial sector as a whole is going to change the way it operates. This is the problem that we face. If anything, its policies are driving cash out without recognising the impact on some very vulnerable people.

[Baroness Penn (Con)]

On interchange fees, decisions regarding the operation and funding arrangements for an ATM network are taken by the parties involved. The noble Lord will know that LINK has commitments to protect the broad geographic spread of free-to-use ATMs and is held to account against those obligations and commitments by the Payment Systems Regulator. It has specifically committed to protect free-to-use ATMs more than one kilometre away from the next nearest free ATM or Post Office and free access to cash on high streets, and it supports free-to-use ATMs in deprived areas through its financial inclusion programme.

I recognise the point that the noble Lord has made. Coming back to the provision in the Bill, while I understand that different amendments have been tabled to look at how it could be enhanced or altered, it is important to acknowledge that legislating to protect access to cash is the Government recognising the point that the Committee made and taking action to address it. We want to have flexibility in how that is delivered, but we are providing for it in primary legislation and I hope that principle is welcomed, even though there are different opinions about how it could best be delivered.

Drawing towards the end of my remarks, I was going to note specifically on accessibility that that question was considered by the most recent Financial Inclusion Policy Forum. As I was saying to the noble Lord, Lord Hunt, while the Government do not support these amendments, I hope that noble Lords recognise the action that is being taken through the Bill and elsewhere, because the Government take these issues seriously. It is right to consider the outcome that we are all trying to deliver in a changing world: accessible financial services. That can mean a range of things, such as for people on low incomes being able to budget their money or for accessibility when it comes to disability, age or other factors. The way we have tried to approach access to cash in the Bill is by looking at delivering those outcomes in a flexible way, so I hope that at the moment the noble Baroness, Lady Tyler, is able to withdraw her amendment and that other noble Lords do not press their amendments.