Financial Guidance and Claims Bill [ Lords ] (Third sitting)

Neil Coyle Excerpts

Tuesday 6th February 2018 Public Bill Committees

[John Glen]

I acknowledge that such concern has been widely expressed throughout the passage of the Bill. However, the FCA has issued total fines of more than £229 million. In its view, its regulatory toolkit is currently sufficient to enable it to fulfil its consumer protection objective. The FCA will consider the precise rules that apply to claims management companies and how they form an effective regulatory regime overall. In doing so, the FCA will need to take into account its statutory objective of securing an appropriate degree of protection for consumers. It will also consult openly and publicly on the proposed rules.

The final regime is not set without consultation or reference to the legitimate concerns raised during the passage of the Bill. I note the hon. Gentleman’s observations, but they can be accommodated by the way in which the FCA will handle the matter. Given that, the Government do not believe the new clause is necessary. According to the explanatory statement, the new clause would introduce a duty of care on claims management companies. I will provide some more detail on that duty of care because I have thought a lot about it and have new points that I want to raise following Second Reading. The Government recognise that there are different views on the merits of introducing a duty of care for financial services providers and what it would mean in practice.

Macmillan Cancer Support has run an excellent campaign drawing attention to that important issue. Last week I met Lynda Thomas and her team from Macmillan in the Treasury to discuss their work and their concerns around the proposed duty of care. They told me of their work with Nationwide and Lloyds. They have been working in partnership with the sector on the role of firms in supporting customers.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

I am sure the Minister is aware that the Department for Work and Pensions is again in court facing a legal challenge for changes to welfare and support for disabled people, including people with terminal illnesses such as cancer. Does the Minister not accept that Macmillan’s recommendations might go some way to rebuilding disabled people’s trust and faith in the Government, including those with terminal illnesses?

[John Glen]

I acknowledge the case, but it is not for me as a Treasury Minister to comment on it. We need to be clear about the impact of the duty of care and examine it carefully. It is right that we challenge practices that are not up to standard. The question is how we most effectively achieve that without wider collateral damage.

On Macmillan’s partnership work in the financial services sector in supporting customers affected by cancer, I pay tribute to the work done and I am grateful for the insights that it brings, but there is huge uncertainty around the potential impact a duty of care could have on both firms and consumers. As with all significant policy changes, it is important to understand all potential pros and cons. I hope Members agree that there would need to be a thorough assessment of the potential impact of a duty of care before any decision is made on a change of policy. For example, a duty of care might enable consumers to bring financial services firms to court. There might be significant cost, complexity and time involved with that, leave alone codifying exactly what the duty of care would mean.

In turn, a duty of care might lead to a negative impact on product provision and approach to innovation, as firms might not want to risk legal challenge based on an untested new concept. Increasing operational costs for firms as a result of a duty of care will inevitably lead to higher prices for consumers, including those in the most vulnerable category. Given those considerations, I hope Members agree that it would not be appropriate for the Government to amend the Bill before a full assessment of the potential impact has been conducted.

The Government believe that the FCA, as the UK’s independent conduct regulator for financial services, is best placed to evaluate the merits of a duty of a care. Recognising the pitch and depth of the legitimate concerns raised, last week I met Andrew Bailey and discussed the duty of care with him, and the FCA will discuss it further. Concern has been expressed that, in the determination to issue a discussion paper post-Brexit, there was too much of a delay. I pressed Andrew Bailey on the need to bring that forward. He understands and acknowledges the desire of Parliament for progress on evaluation, so the FCA now proposes to issue a discussion paper later this year. It will invite contributions from all interested parties on the case for and against a duty of care, what form such a provision might take and consequential issues arising from adopting it. That will be an open process, designed to gather views. I am grateful to the FCA for its commitment to accelerate its proposed timetable.

--- Later in debate ---

[John Glen]

I am grateful to the hon. Gentleman for his remarks. I would not characterise the Government’s position as, “Let it happen mañana and take our hands off the tiller.” I met Andrew Bailey, and this was not his starting point. It is for Ministers to talk to the FCA, take the views of Parliament as clearly expressed by Members on both sides of the House, and use that pressure to force the FCA to address the issue in a comprehensive way that deals with the real experience of our constituents.

The Government have set out that process, and I have set out the rules and facilities that exist for the FCA. I am convinced there is a process in place that will enhance the necessary protection.

[Neil Coyle]

There are some interesting parallels. Where the Government have a clear objective and aim, as they did in welfare reform, consultations are rushed through by Departments. That delivers inadequate legislation, which is why the Government ended up in court, as has been mentioned. In this case, the Government are passing the buck to the FCA, even though Macmillan has identified a problem, whereas on terror insurance legislation, where the ball is back in the Government’s court and could have been covered by the Bill, they have left a gaping hole, which leaves businesses such as those affected in my constituency in June last year facing potential damages because of the inadequacy of legislation. Why have the Government not opened consultation on that?

[The Chair]

Order. It is not permitted to talk about a non-selected amendment in the context of this discussion.

[Neil Coyle]

With respect, Mr Rosindell, I was talking about Government consultations that have a clear aim.

[The Chair]

We will move on.

--- Later in debate ---

[Neil Coyle]

I thank my hon. Friend for raising the issue and for mentioning ABTA, which is based in my constituency. ABTA has done a huge amount of work on the need to introduce exactly what he advocates, to highlight incidents of people fraudulently trying to make claims, supported by cold calling, while posting on Facebook and elsewhere about how much they have enjoyed their holidays and how boozed up they have been. There is clearly a need to address the issue.

[Jack Dromey]

My hon. Friend is absolutely right. ABTA is increasingly concerned about the consequences for consumers more generally and for its business in particular. Hoteliers and airlines will suffer unless the growing scandal, at the heart of which is shameless cold calling, is ended.

We already ban cold calling for mortgages, and we welcome the Government’s commitment to introducing an immediate ban on cold calling for pensions, but we should also be able to ban cold calling for CMCs, and include a ban on the commercial use of data obtained by cold calling. An unmistakeable message needs to be sent: “If you cold call illegally we will probably catch you and, in any case, you will not be able to sell or use any data collected illegally”.

Laws can, of course, be broken, which is why the new clause gives the FCA the power to set appropriate penalties for a breach of either of the bans. Since the banning of cold calling for mortgages, technology has made enormous progress, and we hope that the Government will be prepared to go yet further in the next stages. The ban on cold calling for mortgages has made truly massive-scale cold calling illegal, but the scale of cold calling continues to grow. Cold calling can and does have damaging and dangerous consequences, especially for the vulnerable, for the elderly, for workers like those in Port Talbot at a time of crisis in their lives, and for the business community. It is time to call a halt to all of that, which is what new clause 9 would do.

New clause 6 inserts a provision into the European Union’s privacy and electronic communications directive, which prohibits unsolicited telephone calls for the purposes of direct marketing, in relation to claims management services, except when the person called has given prior consent to receiving such calls. The provision will treat the telephone numbers of everyone cold called about claims management as if they were listed on the telephone preference service register. In 2017, the ICO received 11,805 reports of unsolicited direct marketing calls about claims management from people already on the TPS register, in addition to reports of 17,112 calls and texts for which absence from the register was not deemed to represent consent. The Government amendment will simply add more cases to the yearly total—28,917 in 2017—and will do little to stop the scourge of cold calling. We will not oppose the provision but we invite the Government to comment on our points.

On new clause 8, which has not been selected, the Chairman is absolutely right that it would be an abuse—