Oral Answers to Questions

Debate between Michael Fabricant and Heather Wheeler

Tuesday 5th November 2019 Commons Chamber

[Michael Fabricant (Lichfield) (Con)]

17. What the activities are of staff working in his Department on soft power; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mrs Heather Wheeler)]

As the first woman to speak, may I also congratulate you on your new job, Mr Speaker? The UK is home to world-class universities, cultural institutions and major sporting events that are known throughout the world and that help to promote our values and build relationships. We will keep investing in our soft power assets, including the British Council, the BBC World Service and Chevening scholarships, and engaging with partners as part of our role as a positive influence in the world.

--- Later in debate ---

[Michael Fabricant]

Last summer, the Red Arrows went to North America on an 11-week deployment and I happened, by sheer coincidence, to be in Chicago with the Mayor of the West Midlands. There we were, walking along the esplanade and we saw the Red Arrows on display with around a million Chicagoans cheering the Royal Air Force, which was great. That is a great example of soft power, but when does my hon. Friend think that a soft power strategy might be published?

[Mrs Wheeler]

I thank my hon. Friend, with his great links to the west midlands and the Mayor of the West Midlands, all congratulating the Speaker on his new position. Of course, this was a great example of global Britain going forward. We are all incredibly proud of the Red Arrows and they are a great example of soft power. When the Red Arrows were out there, the engineers and the pilots ran STEM––science, technology, engineering and maths––workshops in schools throughout their route, which was an excellent opportunity to showcase our soft power. To put my hon. Friend’s mind at rest, yes, we will introduce a strategy for soft power once we have won the general election and come back.

Draft Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018 Draft Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2018

Debate between Michael Fabricant and Heather Wheeler

Tuesday 12th June 2018 General Committees

[Mrs Wheeler]

It is a pleasure to serve under your chairmanship, Mr Gray. The regulations were laid before the House on Thursday 3 May 2018. I will refer to them as the approval regulations and the requirements regulations respectively. The private rented sector is an important part of our housing market. It has doubled in size over the last decade, and letting agents now hold approximately £2.7 billion in client funds. The client money held by agents includes rent money and money provided by landlords for the purpose of making property repairs. At the moment, however, there is no legal requirement for agents to obtain client money protection. Tenant and landlord money is therefore at risk if an agent goes bankrupt or if client funds are misappropriated. The main letting agent representatives, ARLA Propertymark and the National Approved Letting Scheme—NALS—support making this protection mandatory. Indeed, it is estimated that around 60% of agents already hold such protection.

[Michael Fabricant (Lichfield) (Con)]

I am curious to understand the context. Can my hon. Friend give any indication of the approximate rate of failures and money lost? Basically, how big a problem is it?

[Mrs Wheeler]

I thank my hon. Friend for his interesting question. I will come to it in the rest of my speech.

Making client money protection mandatory will ensure that every tenant and landlord has the financial protection they need. It will bring the property agent sector into line with others where client money is held, such as the legal profession and travel operators.

Before I set out the detail of the regulations, I want to establish the legislative context. The Housing and Planning Act 2016 provided powers for the introduction of client money protection requirements. Following Royal Assent, the Government invited Baroness Hayter and Lord Palmer of Childs Hill to chair a client money protection working group. The working group reported in March 2017, and its recommendation to make client money protection mandatory was accepted by the Government. The Government consulted on implementing mandatory client money protection in November 2017, and there was broad support for our proposals.

I will now introduce the two sets of regulations. The first set—the approval regulations—establishes the procedure for Government to approve privately run client money protection schemes. The second set—the requirements regulations—requires agents in the private rented sector to belong to one of those approved schemes if they handle client money. These two sets of regulations, which together provide the framework for client money protection, are the subject matter for debate before the House today.

I turn first to the approval regulations, which require any client money protection scheme to be approved by the Secretary of State in order to operate. This is to ensure that all schemes meet minimum standards and offer sufficient financial protection. The Government do not intend to create their own scheme at this time. That would be unnecessary, given the number of schemes in the market already. However, the regulations allow the Government to do so in future, so that any protection can be maintained in the unlikely event that the market ceases to offer provision.

In order to obtain approval, client money protection schemes must meet certain conditions, including those that are designed to ensure that landlords and tenants can easily obtain compensation. The scheme administrator must ensure that it has procedures in place so that valid claims are paid as soon as reasonably practicable—I love that word. It cannot make deductions from those claims. The scheme administrator must also hold a level of insurance cover that is appropriate given the amount of client money held by its members. Schemes must put in place arrangements so that in the event of the scheme closing, their members would be notified and transferred to an alternative scheme.

The approval regulations also establish minimum standards that must be set in scheme rules. They include requirements for members to hold money in a separate client account; to have written, transparent procedures for handling client money; and to maintain adequate records.