Financial Guidance and Claims Bill [HL]

Lord Stevenson of Balmacara Excerpts

Tuesday 24th October 2017 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

14: Clause 2, page 2, line 34, at end insert—
“( ) As part of undertaking its strategic function to improve the financial capability of members of the public, the single financial guidance body must carry out research on a periodic basis, in collaboration with other bodies with an interest in debt issues, to determine—(a) the level of unmanageable debt across England, Wales, Scotland and Northern Ireland,(b) the causes of unmanageable debt, and(c) ways to prevent unmanageable debt.”

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am afraid that I return to the most overworked clause in the Bill, namely Clause 2, subsection (3) of which states:

“The single financial guidance body may do anything that is incidental or conducive to the exercise of its functions”.


Do Ministers genuinely think that that single provision can deal with the breadth of expectation that will be placed on the body, particularly as regards research? It is true that there is a power there, provided that it is “incidental”, whatever that means,

“or conducive to the exercise of its functions”.

Presumably, that can be tested in court if there is any doubt about what it means.

However, let us assume that Clause 2(3) provides the foundation on which a research function will be carried out by this body. The question is then threefold. First, a lot of research is being done in this area, which is all to the good. It is being done by the FCA, which we have talked about a lot, but many others do research which could be brought into scope in this area. Are we confident that the research being done by the commercial sector, banks, the FCA and the SFGB, if it should be able to fund that and start doing it, will fit well within that arrangement? Can Ministers assure us that there will be no blockage if this arrangement is the only way that a body can take that research forward? That is my first general point: do we have competence in this regard and is the constitution sufficient to carry it?

My second and third questions are about scale. Secondly, the problem with this is that we have a lot of information which could perhaps be collated by the body and made available in digestible form. The information that we have been talking about in the FCA report would be slightly indigestible if it was not for the very excellent graphics and graphs it produced which allow us to get into it and make it easier to understand and absorb. However, if we think about the range of issues that could be brought to bear in relation to problem debt and financial capability, we are talking about a very significant volume of activity and work that has to be done.

We should add to that the fact that most of the research is, for good and persuasive reasons, snapshot research—the sort of research which looks at something happening at a particular moment in time. The report from the FCA spans two years but effectively one fiscal year has been chosen, out of which have come the figures. But to understand the causes of unmanageable debt and the way to prevent it we need longitudinal studies. Will the body we are discussing have the resources, the capacity and, most importantly, the constitution to undertake work on that scale? That is very different from being just an incidental part of the function: this is mainstream stuff. It will start now and run for 30 years across a life cycle—perhaps longer—to try to understand what causes unmanageable debt across huge populations, not just in samples. Without that information we will not get the detailed granularity we need to make sure that progress is being made in this area.

Thirdly, we are seeing this through the prism of financial capacity. That, of course, is inevitable given where we are starting from. However, as has been stated in many speeches today, and was certainly raised in Committee, the problem with finance is that it is the end product of a lot of other factors that are going on, all of which I argue also need to be researched. Again, I ask: does the wording,

“The single financial guidance body may do anything that is incidental or conducive to the exercise of its functions”,


really catch the need to look at health data, the Tesco card, the purchase of cigarettes or whatever we will use to build a picture of what is happening in relation to people’s consumption and their use of the funds they have to enable them to do what they want to do in terms of what the Data Protection Bill, which we are about to go on to, describes as human flourishing?

That term has been coined to try to think through the issues relating to individuals and humans in relation to the work of robots. As citizens we will often be unable to determine whether decisions have been reached by robotic means or by persons. Many people who have campaigned on that Bill argue that we have to remain focused on what will help humans to flourish, not just on how automated machines will work. I am sorry about the digression, but I will tackle that Bill next and it is in my mind as I speak.

The issue remains: do we have confidence that the wording will get us to the point where we can make sure that the body will be able to command both the legal personality to do what it is required and also the funding and resources to carry out a really good job of bringing together so much material, over such a large range of activities, to research what is happening in the debt space particularly? I beg to move.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank the noble Lord, Lord Stevenson, for moving Amendment 14—tabled by the noble Lord, Lord McKenzie, in Committee—and for this evening’s debate. The amendment relates to the new body’s strategic function to conduct research on the levels of unmanageable debts across England, Wales, Scotland and Northern Ireland, as well as the causes of unmanageable debt and ways to prevent it.

It is right that this House continues to take a great interest in understanding the causes of debt and how the Government can best help those who are struggling. I thank noble Lords again for their ongoing, important contributions on this matter since the introduction of the Bill and beyond. Problem debt, as the noble Lord has said, is such a serious issue, with wide-ranging consequences for those affected by it. The Bill is testament that the Government take the issue very seriously and recognise that there is more work to do to ensure that fewer households slip into problem debt. I understand the worthy aims behind this amendment: to highlight the importance of research on indebtedness and to ensure the new body gives it all the attention this important issue requires. The strategic function of the new single financial guidance body will play a fundamental role in this area. It will give the new body the responsibility to develop a national strategy to identify the most pressing issues and the most effective interventions in financial capability, personal debt management and financial education, working closely with others in the financial services industry, the devolved authorities and the public and voluntary sectors.

However, the Government’s assessment remains that to specifically reference one area of research over others in legislation is not needed. There are many topics that the new body will need to investigate and I have no doubt that it will conduct research on the very issue that the noble Lord suggests. Significant research is already being undertaken by the Money Advice Service, which is looking at the levels and causes of over-indebtedness across the UK. A great deal of the focus of MAS’s financial capability work, and the work that is envisaged for the new SFGB, will support the aim of preventing and reducing problem debt.

I refer, as I did in Committee, to my visit to MAS recently. I was tremendously impressed by the focus of those working there on research. They are trying to bottom out what it is and find out how we can tackle debt from an early age onwards and really make a difference—not just to be tactical about it, but to ask: what is it that leads to this really difficult issue of problem debt? A lot of this debt starts from an early age—as referred to in the previous debate—but it also has to do with people’s attitude to it and so on. Noble Lords should have every confidence that all these people will be very excited to take this work forward with the new body. However, specifying one issue of research in legislation—as we said earlier this evening, in terms of having lists for things—can always be problematic and could risk hindering the body’s ability to take a wide-ranging, strategic approach across the whole sector.

The legislation has specifically been drafted to enable the body to do anything that is conducive or incidental to the exercise of all its functions, and this includes conducting research. So, yes, in response to the noble Lord, Lord Stevenson, we are confident that doing research is a part of the incidental and conducive function, and I am very happy to give that assurance. This will ensure that the body is future-proof and able to have regard to any unforeseen, emerging issues—ones which we have not even begun to contemplate, I am sad to say, and which may confront us in years to come.

The whole purpose of this new body is to improve the financial capability of the public through its delivery and its strategic functions. To do this effectively, it will need to conduct wide-ranging research to fully understand the issues it is addressing, test what works best and learn new approaches. As I hope I have set out clearly today, the Government believe that the new body should have the ability to choose the specific topics it researches in relation to its function and that these should not be specified in legislation.

The noble Lord, Lord Stevenson, also asked whether the body will have the capacity to do this research on a large scale. Yes, it will have that capacity. I have talked to everybody working across the three existing bodies and they see this very much as a part of their role going forward. Therefore, I hope that, after considering these points, the noble Lord will withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for her ringing endorsement of the role of research in the work of the SFGB. I admire her confidence that it will be able to be done, and I am sure that it will be. We hope that it will be one of the things that will be read in Hansard and used as a way of building up the forward work programme. I am still slightly worried about the breadth of the research and the ability to carry it out on a very long timescale. Longitudinal studies take time and a lot of resources, and they have very few results for a long time, so a real engagement at that level will be required. However, given that that is where we are and it is what we are going to do, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

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Moved by

[Lord Stevenson of Balmacara]

21: Clause 2, leave out clause 2 and insert the following new clause—
“Objectives and functions
(1) The objectives of the single financial guidance body are— (a) to improve the ability of members of the public to make informed financial decisions,(b) to support the provision of information, guidance and advice in areas where it is lacking,(c) to secure that information, guidance and advice are provided to members of the public in the clearest and most cost-effective way (including having regard to information provided by other organisations),(d) to ensure that information, guidance and advice are available to those most in need of them (and to allocate its resources accordingly), and(e) to work closely with the devolved authorities as regards the provision of information, guidance and advice to members of the public in Scotland, Wales and Northern Ireland.(2) The single financial guidance body must have regard to its objectives when it exercises its functions.(3) The single financial guidance body has the following functions—(a) the pensions guidance function;(b) the debt advice function;(c) the money guidance function;(d) the strategic function.(4) The pensions guidance function is to provide, to members of the public, free and impartial information and guidance on matters relating to occupational and personal pensions.(5) The debt advice function is to provide, to members of the public in England, free and impartial information and advice on debt.(6) The money guidance function is to provide, to members of the public, free and impartial information and guidance designed to enhance people’s understanding and knowledge of financial matters and their ability to manage their own financial affairs.(7) Where the single financial guidance body provides information, guidance or advice to a person in pursuance of one of the functions mentioned in subsection (3)(a) to (c), it must consider whether the person would benefit from receiving information, guidance or advice in pursuance of any other of those functions and the single financial guidance body must ensure that, where information, guidance or advice is provided on its behalf by an SFGB delivery partner, the SFGB delivery partner is under a duty to do the same.(8) The strategic function is to develop and co-ordinate a national strategy to improve—(a) the financial capability of members of the public,(b) the ability of members of the public to manage their debts, and(c) the provision of financial education.(9) In developing the national strategy, the single financial guidance body must work with others, such as those in the financial services industry, the devolved authorities and the public and voluntary sectors.(10) The single financial guidance body also has the function of providing advice and assistance to the Secretary of State on matters relating to the functions listed in subsection (3).(11) The single financial guidance body may do anything that is incidental or conducive to the exercise of its functions.(12) In this section “the devolved authorities” means—(a) the Scottish Ministers,(b) the Welsh Ministers, and(c) the Department for Communities in Northern Ireland.”

[Lord Stevenson of Balmacara]

It seems rather perverse, right at the very end, to talk about a clause that we have been debating for nearly a whole day and then to propose that it should be struck out and replaced with something else. Also, I wonder whether the clerks understand what we are trying to do here. We have already amended Clause 2 as it currently stands and they have not raised a single eyebrow. Actually, two eyebrows are being raised at the moment but they were not raised earlier when we seemed to stray into the territory of constitutional confusion, although I do not wish to raise that again today.

Let us be quite clear about this. The amendment was meant to be an attempt to aid wider public understanding of what the body is about. When we went through Committee, and certainly when we talked about some of the issues relating to the Bill in meetings, it was felt that we had the wording in the Bill as published before this stage—starting as it did with functions and moving on to objectives—the wrong way round. It was felt that there would be better clarity and a better understanding of what we were about if we could rejig it in a way that focused on the long-term vision of this body, how its constitution and powers supported that long-term vision, and what functions it needed to achieve that objective in the medium term. Amendment 21, in my name, is an attempt to do that. It borrows heavily on discussions with the Bill team, for which I am very grateful, and indeed some of the wording may be rather familiar to the team. It is not far from what appears in the Bill as currently printed, except that it is in a different order. I argue that the way it now reads—and I hope that there will be support for this around the Chamber—provides a much more logical approach to what we are going to do.

In a nutshell, the problem is that if you start with the functions of the body as it may be in the future, you tend to think of those in terms of where we are at the moment with the existing constituent bodies—the MAS, Pension Wise and TPAS. If you detach that from your initial thinking and think only about what will happen to the consumer and the journey the consumer takes in trying to get the information, advice or guidance that they seek, in the appropriate way, it clears up a lot of the confusion that we ran into and the terminological difficulties that we had. They were helpful in that they brought out the problems that we faced, but unhelpful in that they brought us back to confusion about what this body was about.

In Amendment 21, the objectives, coming before functions, are listed in proposed new subsection (1). In proposed new subsection (2) they are now objectives, whereas before they were functions, and then the functions follow. The related powers come after that. It has a clarity of overall shape that commends it, but I doubt that the wording is now sufficient to cope not only with where we might want to see changes coming forward but also in light of what has happened.

I have anticipated an amendment already in the Bill, as of this afternoon, by including within the phrasing of my current amendment the “free and impartial” amendment, which we have accepted. I took a bit of a chance on that but I am delighted that we have agreed that that should go forward, as it should do. There may be others that a little bit of time and work by parliamentary draftsmen could polish up by the time we get to Third Reading. I hope that, when the Minister responds, she might feel it worth taking away this amendment and bringing back something that would substitute for the existing Clause 2 in a way that fulfils some of the objectives that I have set out here today. I beg to move.

[Baroness Buscombe]

My Lords, I thank the noble Lord, Lord Stevenson, for this amendment to Clause 2. I also want to thank all noble Lords who have spoken today in connection with the functions and objectives of the single financial guidance body. We have had a wide-ranging debate, covering matters including financial inclusion, financial exclusion, financial education, scams and fraud, and unmanageable debt. We were also going to debate, and accept as important, the resourcing of front-line services.

I also thank the noble Lords, Lord Stevenson and Lord McKenzie, for the discussions that we have had outside the Chamber in relation to this clause and how it might be reframed. As noble Lords have rightly indicated, Clause 2 is the foundation that sets the whole tone and ethos for how the single financial guidance body will operate. It provides, as we have discussed today, the framework and lens through which the body will exercise its functions and make progress, working with others towards achieving its objectives.

I think that we are all agreed that establishing the single financial guidance body with a framework of broad core functions and objectives provides a sensible and pragmatic way forward. The amendment that the noble Lord, Lord Stevenson, has tabled does four key things. It restructures the subsections in Clause 2 to bring to the fore the body’s objectives. It places an obligation on the body to consider all a person’s information, financial guidance and debt advice needs, and whether they would benefit from receiving other services that the body provides. It seeks to clarify that the body will hold the pen and have some responsibility for ensuring that all parties involved in developing a national strategy make progress on taking it forward. It also seeks to extend the strategy’s financial education element beyond children and young people. I see the value in the intentions behind this amendment.

There is a certain merit in setting out up front what the objectives behind the activities of the body should be. I also see merit in making it more apparent that the single financial guidance body will take the lead in developing a national strategy to improve people’s financial capability and ability to manage debt. These changes could clarify, not only to the body but also to all those it will work closely with, that these are the Government’s and Parliament’s expectations.

I recall that the noble Lords, Lord Stevenson and Lord McKenzie, raised a similar point in Committee about ensuring that, if a member of the public comes to the new body seeking information, guidance or debt advice from two or more different functions of the body, they will be able to access those different functions if needed, as opposed to only one function. I think we all agree that this is important. While this was one of the Government’s stated aims for the single body, I still believe that it is already encapsulated in the Bill. However, I can see that it may be useful to strengthen that point and make it more obvious in the legislation.

We discussed earlier amendments tabled by the noble Lords, Lord McKenzie and Lord Stevenson, and the noble Baroness, Lady Kramer, on matters relating to financial education which seek to extend the element of the strategic function beyond the provision of financial education to children and young people. I do not think it is necessary for me to reiterate the points which I and my noble friend Lord Young made when discussing Amendments 9, 10 and 13, but I am supportive of much of the intent behind this amendment. I feel that we agree on the broad thrust of much of what it aims to achieve. On this basis, I trust, and very much hope, that the noble Lord, Lord Stevenson, will withdraw the amendment to provide some further time for us to consider and refine it before bringing it back at Third Reading.

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[Lord Stevenson of Balmacara]

My Lords, how could one possibly resist that invitation? I accept it in every way possible. We were joking beforehand that we were so in debt to Ministers that at one point we would have to run round the table and embrace the noble Baroness to thank her for all that she has done on our behalf. I will hold back on that for now—we need to see what happens at Third Reading before we get to the kissing stage. But I thank the Minister very much for what she said. It was also wrong of me not to mention the additional important point about proposed new subsection (7) and I am glad that she was able to pick it up and talk about it. I am sure that we can work together on this. There is time to get it right before Third Reading. I beg leave to withdraw the amendment.

Amendment 21 withdrawn.