Financial Exclusion (Liaison Committee Report)

Lord Tunnicliffe Excerpts

Wednesday 25th May 2022 Grand Committee

[Lord Tunnicliffe (Lab)]

My Lords, I congratulate the noble Baroness, Lady Tyler of Enfield, on securing this debate. It returns us to the topic of her committee’s 2017 report. This was, of course, supplemented by the Liaison Committee’s follow-up inquiry, which is the formal subject of this debate. I am grateful to both committees for their work in this important area, and to the noble Baroness, Lady Tyler, and the noble Lord, Lord Shinkwin, for their ongoing interest. I pay particular tribute to the noble Lord, Lord Holmes of Richmond, who has pursued many of these issues tirelessly across different Bills. He enjoyed some success on the matter of cashback during last Session’s Financial Services Bill. I suspect that we will revisit some of his other amendments when the financial services and markets Bill is brought forward.

Five years have passed since the publication of the original committee report. Tackling financial exclusion is a long-term project; we cannot expect every aspect of that challenge to be addressed in a few years, and there can be no doubt that the pandemic slowed progress. However, it is regrettable that solving many of these problems remains as urgent in 2022 as in 2017. Thankfully, in recent times, we have seen some innovative approaches from financial institutions to improve financial inclusion.

During an Oral Question on 22 March, I cited a joint project between HSBC, Shelter and other homelessness charities to ensure that certain individuals with no fixed address can access basic banking services. These kinds of initiatives are hugely important, helping people to break the cycle which prevents them claiming social security or holding down a job. Welcome as these schemes are, they can only ever benefit a relatively small proportion of those who find themselves excluded from the financial system. What we really need, and what I hope the financial services and markets Bill will finally offer, is a coherent, joined-up approach to financial inclusion. That means the Treasury taking responsibility where that is appropriate to empower the regulators if they are lacking the right tools to act.

The Government recently published a summary of responses to their access to cash consultation. That document also outlined in brief terms how they intend to use the forthcoming Bill to preserve cash for those who want to continue using it. We broadly welcome the intent, but I hope that the Minister will use today’s debate to signal how the Treasury intends to act in other areas. For example, even if access to cash is preserved, what about protecting access to physical bank branches? Research from Which? published in April warned that almost half of the UK’s bank branches have disappeared. Those that remain are increasingly offering reduced services or closing earlier in the day. This is by no means a new phenomenon, so why have the Government not acted to prevent these closures?

Elsewhere, the Financial Conduct Authority’s regulation of the “buy now, pay later” sector is gradually coming on stream. However, the regulator has been clear that it expects the worsening cost of living crisis to push more people towards these new credit options, increasing the overall risk level. What assessment have the Government made of people’s increased reliance on personal credit? Will the new Bill address that? Can the Minister comment on the FCA’s consumer duty and whether the upcoming legislation will seek to strengthen it? It is worth remembering that the Government moved in these two areas only because of sustained pressure during the last Financial Services Bill. Much of that pressure was exerted by my noble friends Lord Stevenson of Balmacara and Lord Eatwell, but they were supported by noble Lords across the House and campaigners outside this place. How can we be confident that external voices are being heard as the Government put their legislative package together?

We may have come a long way on tackling financial exclusion, but the job is by no means done. I hope the Minister will recognise that fact in his response, and that the Treasury will avail itself of the experience of those who have spoken in this debate.

I will end on a slightly tangential point, if noble Lords will allow. These are very tough times for many across the country. Those with good access to financial products are struggling enough, but those excluded from them face what can only be described as an impossible task. Yesterday, people found out that the energy price cap is likely to increase by a further £800 in October. This situation is simply not sustainable so, while we await the financial services and markets Bill with interest, will the Government—I hope today or tomorrow—do the right thing and bring forward an emergency Budget? The Chancellor’s stubborn refusal to act can only harm efforts to provide people of all backgrounds with the financial security that they so desperately crave.