Draft Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018 Debate
Full Debate: Read Full DebateNeil Gray
Main Page: Neil Gray (Scottish National Party - Airdrie and Shotts)Department Debates - View all Neil Gray's debates with the HM Treasury
(5 years, 9 months ago)
General CommitteesIt is a pleasure to serve under your chairmanship, Mr Bailey. I was involved in the passage of the Financial Guidance and Claims Act 2018, so I recognise much of what we are discussing. Mostly, the measure is necessary and welcome, not least because the Government’s brief highlights that 76% of the public have said that they do not trust claims management companies. Taken with the scandals around the RBS global restructuring group and the mis-selling of payment protection insurance, that highlights the desperate need to beef up the UK Government’s failing regulatory framework to ensure that consumers are treated fairly. Hopefully the FCA will do a better job of that than the Ministry of Justice has to date.
I support much of what the hon. Member for Oxford East has said, including her call for appropriate resources to be directed to the FCA, given its ever-growing burden of responsibility. She also spoke about cold calling, on which I would welcome the Minister’s response. That is something that my constituents and I are plagued by on a daily basis. I know that the Scottish Government passed a legislative consent motion for the 2018 Act, but I would appreciate an update on what discussions about this SI have taken place with the Scottish Government, as well as with actors such as the Law Society of Scotland and others that will be directly impacted.
In conclusion, although much of this is to be welcomed and supported, the five-year wait for a monitoring review is too long. We need earlier monitoring to ensure that what has been done has been done correctly. I hope that the Minister will look at coming back to the House on a voluntary basis to report on the progress of the measures in the Act and this SI, to make sure that this is being done appropriately.
I will move on to that in a moment. I also want to touch on the point about the ICO as an enforcer, and why not the FCA. There are two debates here. The hon. Member for Garston and Halewood asked about the FCA’s suitability. One issue that has come up—my hon. Friend the Member for South Norfolk mentioned it as well—is the ICO’s experience and powers to enforce the restrictions on CMC cold calling. The ICO can levy fines of up to £500,000 for breaches of the Privacy and Electronic Communications (EC Directive) Regulations 2003. It has the international reach to enable enforcement action when companies are operating abroad, and perhaps calling my hon. Friend.
The ICO and the FCA work together to establish whether the claims management company has FCA authorisation to carry out marketing activity. The FCA will be able to consider whether the CMC is in breach of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and will sanction appropriately. It is really about the concentration of the FCA’s skills and experience in this domain.
I thank the Minister for explaining where the Government are trying to move to in terms of CMC cold calling, which was a hot topic of debate during the passage of the Financial Guidance and Claims Act 2018. What he has described does not go as far as banning CMC cold calling, although he has banned it for pensions. Why is he not banning it? That is what we are getting plagued with. The hon. Member for South Norfolk and many others will be in the same position as me.
I entirely agree. That is the purpose of the draft order, which will enable claims management regulation to be transferred to the FCA and the Financial Ombudsman Service. Given the breadth of their existing regulatory oversight, that will satisfy the concerns of those who want a more robust regulatory regime in place. Consumers will benefit from a well-regulated and professional claims management industry. The industry can provide important services to some consumers, but there needs to be confidence in how difficulties are handled.
I do not believe that the Minister has adequately addressed the point raised about the five-year wait for monitoring. He says that he is accountable to the House. Of course he is, but it would be far more useful if he could lay progress reports before the House and have more frequent voluntary reviews to allow proper scrutiny of progress.
My view is that there are clear categories that the Government have been challenged on with respect to inclusion. There was a judgment to be made about what was to be included in the order at this point in time, but I would seek to make regular reports to review progress—far more frequently than every five years, which is the formal requirement. It would certainly be within the FCA’s remit to introduce changes far more regularly; if the hon. Gentleman reflects on the FCA’s work on high-cost credit, he will agree that its interventions have led to more rapid changes. My expectation is that the regulator will respond to market changes and consider the appropriateness of extending to additional categories.
I hope that the Committee has found this evening’s sitting informative and will support the order.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018.