Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019

Lord Stevenson of Balmacara Excerpts

Wednesday 1st May 2019 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

That this House takes note of the Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019 (SI 2019/383).

Relevant document: 21st Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

[Lord Stevenson of Balmacara (Lab)]

My Lords, in moving the Motion standing in my name on the Order Paper, I stress that it is an attempt to bring forward an opportunity for those who are interested in this topic to debate it at length. In the absence of any other opportunities, and given the fact that there is space within our normally busy and packed schedule, I hope this will be welcomed by all Members of the House.

I declare my previous interests as a former chair of the StepChange charity and as a member of the Financial Inclusion Commission. However, I have no current interests which would otherwise need to be declared.

The main purpose of the debate is to draw attention to statutory instrument 2019/383, on financial services consumer protection. It deals with the naming of and consequential amendments to the body set up by the Financial Guidance and Claims Act 2018, which this House spent a considerable amount of time discussing and amending before it was completed.

As a result of the provisions of and powers in that Act, it was not at all unreasonable for the Government to suggest that the body previously known as the Single Financial Guidance Body should be renamed. Indeed, the naming has been done relatively quickly and seems to have gone down quite well. It is, of course, rather simple: the Money and Pensions Service. It does not try to confuse by any complicated and clever analysis of the work it is doing. One hesitates to quote, “What’s in a name?”, but I sometimes wonder whether in the simple name “Money and Pensions Service” lies a deeper worry that we are actually talking about two separate issues. That was a theme in all our debates on the Financial Guidance and Claims Bill. It may be inevitable that how people in this country operate and manage their money is quantitatively and in many other ways different from the way in which they save for and, we hope, live off their pension in the later years of their lives. The functions of the three organisations that were brought together to create one body—I am going to call the Money and Pensions Service “MAPS” in future as it is easier—are different. We should recognise that they are different. They will have different interests and concerns and there will be different pressures brought to bear on the body by those agencies.

The timescales over which those functions operate are clearly different. Debt or concerns about money are very often short term and operate at different times in people’s lives. Pensions have to be saved for over an extended period and are subject to much more concern about the impact they will have later in life. With people living longer, they need more concern and interest given to them. The impact that both issues have on the economy is different. Indeed, there was some logic in the Government’s original proposal to set up two bodies to look after issues that arise from debt and money more generally, and those that arise from pensions. The final decision was to combine them in one, and we are where we are. I do not think there is much point in going back over these issues. We should acknowledge that we need to give the new body time to settle in and should build in an appropriate review period in which decisions can be looked at. As I say, we are where we are.

Looking at the body itself, it is early days. It has established itself. It has developed a logo, as one would expect. I have no particular views about that. I noticed that at the official launch, the chief executive—it is hard to get a sense of this from reading the speech—made a slightly tentative poke at whether people thought it captured the spirit of what the body is trying to do. I could not hear echoes of laughter or concern in the room as a result; I am sure it went down well. After all, it is a very clean, rather curly object which I am happy to wave around. At least we have it: the body is established. It has its format, it has a board of significant people with real contributions to make in this area. It has a very distinguished chair, Sir Hector Sants, who not only comes from the debt charity StepChange—indeed, he was my successor there—but is also the former chief executive of the FSA. We are talking about a substantial body, at a time when it needs to draw together the issues that have been given to it by Parliament. It now has its senior staff in place, and they look to me to have considerable skills and expertise. I am sure they will do very well. A real commitment comes through in all the documents I have seen—they are largely two speeches, but there are some other papers—to consult about the future, to build on possibilities for the business plan, to engage with as many people as possible and to take advantage of the new body going forward. That has to be a good thing, and I welcome it and look forward to it.

Having said that, there would be little point in having this debate if we did not raise some issues for the Minister to respond to, so I advised her beforehand that I might ask a couple of somewhat difficult questions and raise issues that she might want to reflect on over time. I am going to focus mainly on the debt side of the new body—I think others will come in on the pension side. I hope that together we will get some sense of the overall issues.

We have to recognise that considerable problems in the economy are still arising from unmanageable debt. Recent figures from the StepChange yearbook, which has just been published, show that the total number of people in contact with the charity has increased significantly over the last 10 years—from 577,000 to 657,000. That is significant given the capacity of the body to deal with that number. We are talking about why people get themselves into unmanageable debt. It is mainly down to reduced income arising from unemployment, redundancy or injury. Therefore, there is no change there, and the individual contributions are very interesting.

--- Later in debate ---

[Baroness Buscombe]

I thank the most reverend Primate the Archbishop of York and the noble Lord, Lord McKenzie, for giving me a further springboard to have discussions on this with my ministerial colleagues in the Department for Education. It is something that we worked on during the passage of the Bill. We did not get as far as we would have liked. We will try again, but we will also keep talking to the Treasury about this and hope to make progress.

[Lord Stevenson of Balmacara]

My Lords, I thank all those who have contributed to this short debate. It has served its purpose and achieved what we wanted, which was a chance to reflect on the progress made since the passing of the Bill and an update on the heartening and encouraging work now going on—the listening posts, the three-year plan and the idea that out of this will come a national strategy. I cannot remember whether in the Bill we required that to be brought back to Parliament, but I am sure that an inventive Minister like the one who has just responded would be able to find a way of allowing us to have another discussion on that strategy when it is produced so that we might at least have some sense of engagement with it.

One question arises from that which does not need to be responded to today. On the programme of events that will accompany the emergence of MAPS as a fully fledged body, the breathing space can be achieved by regulation, but the statutory debt management plans require legislation, as might some of the work on pensions. I do not see many notifications of that in the forward programme, but that itself is also quite difficult to discern. When the Minister has some information, perhaps she might share it with us when we are developing that set of legislative processes, because it would give us opportunities to come back to some of the issues we have not touched on. There is an outstanding Goods Mortgages Bill which would be fantastically important in eliminating one more of the high-cost credit problems that we have; namely, that car book loans, established under Victorian legislation of 1858 and 1862, still exist and fall completely outside the current system under which the Financial Ombudsman and others can operate. They predate that and are about a thing called a bill of sale, which should be outlawed. If we cannot get that on to the statute book as part of this process, we are really failing.

I think the question of bailiffs will come up through the report of the Ministry of Justice on bailiff operation. There is a clear need for a statutory basis for bailiffs’ operations. A good code of practice and some form of redress system would contribute considerably to assisting those in trouble. Those are details to be followed up. I include in that the pensions dashboard, which the Minister did not touch on but which is also an important step forward.

The most reverend Primate the Archbishop of York was right to say that there is still too much high-cost credit around. The corollary of that is that there is still a problem about low-cost credit being available at the appropriate time and in the appropriate amount to those who, curiously, borrow the most in our society. The poorest in society borrow more than those further up the income scale because they have to. As they are paid on a short-term basis or are living on limited amounts of money, they have to borrow when big expenditure arises. The system does not provide for that—not even for basic bank accounts. We need to go back to that and think more about savings. Auto-enrolment is a huge success. A lot of thinking by the Treasury has contributed to it—under previous Governments as well as under the current one—and it is to be given great credit. When it was first proposed when I was in a think tank, I thought it was the daftest thing I had ever heard of—making people contribute to savings when there were so many other pressures on them—but it has been a huge success and I am very glad that it is there.

However, it is only part of the story. It is far easier to borrow money in this society than it is to save. Why is that? Why do we have perverse incentives about people being able to accumulate cash that would see them through? I did not cite the statistics in the StepChange yearbook, but it is still incredible that a huge number of people do not have enough money from their current income to see them through one month’s problems. We must do something to help them.

The most important strand is education. We delude ourselves if we think that by simply asserting that this is an important area that should be in the national curriculum we will achieve it. Both my noble friend Lord McKenzie and the noble Baroness, Lady Neville-Rolfe, have experience of trying to get this to work in previous Administrations and I wish the Minister well with it. Is there anything we can do to ensure not only that this is seen as a good idea but that it is taken up by those with the ability to deliver, particularly given my noble friend’s points about the new environment? The Government’s only statutory ability is in relation to the limited number of schools that are still a local authority concern, but they have no lien in terms of forcing through the curriculum for academies or those schools in private hands. There are situations where kids will not learn what we all know they need to learn. Exactly like the noble Baroness, I wish I had known at the time, when I could have done something about it, what I know now when I am in such straitened circumstances.

Motion agreed.