Financial Services Bill

Debate between Neil Parish and Sheila Gilmore

Monday 23rd April 2012 Commons Chamber

[Neil Parish]

Yes, I do. Many people in the banking sector would probably disagree, but I believe that anything over 50% is far too high. It is obscene and immoral to allow companies to go on charging vast amounts of interest—I do not care who they are—and that is why we have to take action. I am looking to the Government to do so, not only through legislation but through stating that such companies should clearly set out their rates of interest and the consequences of non-repayment, so that our constituents can take advantage of credit that is competitive and that will not ruin them.

[Sheila Gilmore]

In speaking to the new clauses and amendments in this group, the Minister appeared to say that many of them were unnecessary because the issues would be dealt with through the setting up of the Financial Conduct Authority. However, it is our role as parliamentarians to take up these issues, to state explicitly that we need to give political guidance on the matters that our constituents find important, and to discuss the work that needs to be done by the FCA. There is no reason why these measures should not be incorporated into the Bill. That is surely better than waiting for four or five years, only to discover that the problems have not been addressed because the means of doing so had not been set out as clearly as they might have been. I hope that the Government will therefore reconsider their position on this.

I am surprised at the way in which the Minister dealt with amendment 55. His objection to its proposals on legal aid and legal advice seemed to be that they would undermine the provisions of the Legal Aid, Sentencing and Punishment of Offenders Bill. Perhaps I have got this wrong, but I had understood that the justification for restricting legal aid was a financial one. We have been given the usual argument that the country is in a financial mess, we have a deficit and we have to save money on the legal aid bill, among many other things. It is therefore disappointing, when someone comes up with another way of financing legal advice for complicated cases, that that is not acceptable either. The Government therefore seem to be suggesting that granting legal aid in such cases is, in itself, a bad thing.

After all, we are not stopping litigation, and we are not preventing people with plenty of money from litigating on any issues. The ending of legal aid will simply result in considerable detriment for people who do not have the money to pay for their legal advice. It is regrettable to say that the proposals would somehow undermine the Government’s intentions. When we were debating the Legal Aid, Sentencing and Punishment of Offenders Bill, various speakers on the Government Benches said, “We would like to do these things, if we had a way of funding them.” They were not saying, “We really do not want to do these things at all.” They seemed to be saying that the measures were being brought in with some sadness, so when someone comes up with a partial solution, it is a shame that we cannot investigate it further.

Amendment 37 seeks to make it explicit that the work of the Money Advice Service should be to help those with the greatest problems who are suffering particular difficulties as a result of financial exclusion. The previous Government tried to address those problems through various formats. The present Government are suggesting that this will be done anyway, and that the service will be the same for everybody. However, that assumes that everyone is starting off on the same footing, which is not the case. Many people have limited choices and are therefore more likely to get into financial difficulties. The Money Advice Service should be giving those people a specific amount of its attention, and to spell that out in the Bill would not be unreasonable.

I listened to what the hon. Member for Solihull (Lorely Burt) said about the phasing out of debt management companies. We are not saying that such companies that operate on a commercial basis should disappear. The amendment suggests that it should not be the individual consumer who pays the up-front price for those services. There are alternatives, and some commercial companies could continue to operate if the financial organisations were to foot the bill. We shall be seeking to achieve that.

Finally, I want to say how important it has been that people have campaigned on these issues; for example, my hon. Friend the Member for Makerfield (Yvonne Fovargue) has campaigned hard on debt management companies, while my hon. Friend the Member for Walthamstow (Stella Creasy) has campaigned on high-cost credit. We are now some considerable time on from when we had a big debate in this place, with many Members attending and speaking on these issues, yet we are so little further forward.

If we look at the wording of amendment 40, it makes no specific pitch for a particular cap or how exactly to achieve the aim; it simply asks the FCA to make the rule. Further discussion and consultation will be necessary about what those rules should be, but the amendment asks the FCA to make this an important and early part of the work it does. I do not view that as at all unreasonable.

The alternatives proposed are not good enough. Financial education is fine, but when facing a difficult situation, no amount of financial education is good enough when there is so little choice. Sometimes regulation and financial education are proposed as alternatives, but I do not think they are. It would be great if people were better financially educated, but in a tight spot, that is not enough.