Bank of England and Financial Services Bill [Lords]

Debate between Richard Burgon and Mark Field

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Mark Field]

I have a brief question on amendment 6. Although I accept that transparency and openness are the spirit of the age and we cannot necessarily move entirely against that—[Laughter.] We do our level best some of the time. I am sure that the Treasury will be at the vanguard of this. Does the hon. Gentleman accept that, at times of great difficulty, when there are issues about the stability or functioning of the UK’s financial banking system, it would be appropriate not just for the Treasury Committee but for the Treasury itself to have some say in suggesting when openness should not be fully fledged? The safeguards that he has put in place in the amendment refer only to the Treasury Committee; does he not see that there might be instances when Ministers rightly have concerns about issues of stability that should be protected from open transparency at least for a time, although there could then be a move to make the minutes and other things more open at some future point, once the particular threat had passed?

[Richard Burgon]

I thank the right hon. Gentleman for his intervention. It may be that transparency is the spirit not just of the age but of the future—we shall see. I draw his attention to the wording in the amendment:

“The Comptroller shall submit reports arising from the exercise of his powers under subsection (6A)”.

It is not a completely open-book policy.

On new clause 2, which is in the name of the hon. Member for East Lothian (George Kerevan), Labour sees merit in the proposal for wider geographical representation on the board. In Committee, we tabled an amendment making the case for amending the composition of the court to ensure that different stakeholders were represented, including having dedicated places for customers and practitioners.

Similarly, we support new clause 13 tabled by my hon. Friend the Member for Bishop Auckland. She has a long track record in campaigning for greater transparency in financial services, and her new clause sits well with our amendments, as it seeks to empower the National Audit Office further by making the case for greater powers for freedom of information requests.

I now turn to new clauses 3 and 5, put forward by the Scottish National party and Plaid Cymru respectively. Both new clauses would change the name of the Bank of England. In fact the SNP was so keen to discuss its proposal that it tabled it twice. We discussed that measure in Committee and it is before us again. It seeks specifically to have the name of Scotland, as well as those of Wales and Northern Ireland, as part of the title of the Bank. The SNP has now been joined by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who has taken a different tack and removed all national names; his new clause would mean that the name of the Bank referred solely to the currency—for the avoidance of doubt, that is sterling, not Stirling. We were happy to support the SNP’s proposal in Committee, recognising as it does the unifying role of the Bank—that has been expressed again today—as one which services all parts of the United Kingdom, and we will support it again.

New clauses 6, 7 and 8 and Government amendment 3 have a number of merits. New clause 7, in the name of the hon. Member for Carmarthen East and Dinefwr, sets out a new mandated objective for the Monetary Policy Committee to include maximum employment. New clause 6 proposes the nomination of representatives on the MPC from the devolved authorities of Scotland, Wales and Northern Ireland, and new clause 8 argues that the Bank should be more accountable for its decisions to those same bodies.

The Labour party has established a review into the mandate of the Monetary Policy Committee under former MPC member David Blanchflower. We have said previously that we will look at a wide range of ideas, including what can be learned from the US Federal Reserve. That will include considering the importance of growth, employment and earnings in the MPC’s deliberations. Indeed, on new clause 7, David Blanchflower has himself written in City A.M.—the favourite publication of the Labour Front-Bench team—that he will consider the issue of maximising employment in his review. He is also looking at the structure, size and, crucially, gender balance of the MPC, optimal policy rules, asymmetrical targeting and the relationship with fiscal policy, as well as the frequency of the MPC’s meetings.

Therefore, although we welcome the proposal for the Bank to report to the devolved authorities, we will not support the new clauses on the MPC today. We see merit in them as part of an ongoing debate, but look forward to considering and sharing the results of David Blanchflower’s review in due course. With that, I draw my comments on this group of measures to a conclusion.

Draft Payment Accounts Regulations 2015

Debate between Richard Burgon and Mark Field

Wednesday 9th December 2015 General Committees

[Richard Burgon (Leeds East) (Lab)]

It is a real pleasure to serve under your chairmanship, Mr McCabe. I thank the Minister for the way in which she outlined the regulations, which implement the EU payment accounts directive. The Opposition will not oppose the regulations, but since we want a banking sector that works in the interests of consumers rather than penalising them, I would appreciate further detail on some matters from the Minister and further explanation of the rationale behind some of the decisions that the Government have made.

Some payment account fees for switching accounts or using overdraft facilities have cost individual account holders billions of pounds. That has been subject to campaigning by consumer advocacy and advisory groups such as MoneySavingExpert.com and Which? for several years. Those campaigns have seen not only millions won back for consumers, but changes in the industry to fees and the information available about fees. That is to be welcomed, but with the most recent research from Which? in August 2014 confirming that several of the biggest banks have relatively poor customer satisfaction levels for their current account offerings, and continued concern regarding overdraft fees and their impact on people on lower incomes, the debate will clearly continue after today’s discussion.

[Mark Field (Cities of London and Westminster) (Con)]

The shadow Minister is making a robust case for the consumer, but does he recognise that ensuring that a basic account is available for any legal resident of the EU under the directive may increase the prospect of fraud or financial crime? How would he ensure that the concerns raised by some in the finance industry are dealt with properly, while standing up for those who otherwise would be left behind in the way that he suggests?

[Richard Burgon]

The Minister raised the issue of everyone in the UK being able to have a bank account. With respect, it is for the Government to suggest how fraud will be guarded against in these circumstances. The Minister may be able to address that in her further comments.

Today we are talking about the implementation of the EU payment accounts directive and our regulations. As the Minister indicated, the PAD has three main principles: first, to improve the transparency of fees relating to accounts that are principally personal accounts; secondly, to make it easier for consumers to switch accounts, and thirdly, to make sure that all EU consumers can access banking services by ensuring the availability of a sufficient number of accounts with basic features. When the Minister touches on that, she may wish to outline the Government’s position on the point that the right hon. Member for Cities of London and Westminster made about preventing fraud in such circumstances.

I will pick up the point on payment account fees. There is significant crossover between the regulations and the Competition and Markets Authority’s recent report on the banking sector. On overdraft fees, the CMA’s analysis shows that outcomes are particularly poor for heavy overdraft users and indicates that around 9% of customers have paid more than £20 a month in overdraft charges. Furthermore, around 2% have paid more than £60 a month in overdraft charges. So the CMA’s evidence shows how the monthly charges for using an unarranged overdraft can be as much as 15 times higher than for those with an arranged overdraft.

The consumer group, Which?, has said that the CMA should tackle higher overdraft charges. One proposed remedy is to consider stopping banks differentiating their charging structures for arranged and unarranged overdrafts.

With regard to switching accounts, research conducted for the Competition and Markets Authority found that 37% of people had been with their bank for more than 20 years and a further 20% had had an account for between 10 and 20 years. The report also found that only 3% of customers switched in 2014.

Will the Minister explain what analysis of this the Government have undertaken? If so few people change banks, as these figures suggest, is there a failure to extend the regulations to cover existing customers and is that undermining their effectiveness?

The CMA’s report also made the following points:

“Low levels of customer switching mean that banks are not put under enough competitive pressure, and new products and new banks do not attract customers quickly enough… Bank customers fear that switching their current account to a new bank will be complicated, time-consuming and risky.

[Mark Field]

Will the hon. Gentleman give the banks some credibility and accept that the lack of switching may be down to customers’ broad satisfaction? It is often assumed that we do not have large-scale switching. As the hon. Gentleman pointed out, many adults have bank accounts at a particular bank for decades—20 or 30 years at a time. That might reflect their broad satisfaction with the service they receive, rather than any fault of the Government, which have gone a long way in at least trying to ease the process of switching.

[Richard Burgon]

I am not seeking to attack the credibility of the banks, but I think that, given the statistics I have just cited, we need to look into this further and ensure that people are not staying with banks during their busy lives just out of habit, and that they are fully aware of the options. Opposition Members will also agree that competition is very important in the banking sector as it is elsewhere.

However, despite identifying those problems, the remedies that the CMA propose put the onus on consumers to navigate the system, focusing on measures to make it easier to switch bank accounts. With this in mind, will the Government say how they anticipate that the Competition and Markets Authority’s report into the banking sector will be integrated into this framework?

The regulations also state that the Money Advice Service would be required to operate a comparison website. There is some concern that this could be funded by cuts to Money Advice Service spending elsewhere rather than by increasing the levy on industry. Will the Minister clarify how the website will be funded and provide more detail about the timescale? For example, when does she expect the resource to be available to consumers?

Finally, during the consultation, no information was received about the anticipated costs to non-current-account switching members, as a result of the proposed approach on switching, nor did the responses address the costs or benefits to consumers as a result of the proposed measures. Will the Minister also comment on these points?

As I said at the beginning of my remarks, we do not oppose the measures. Public confidence in the banking system needs to be addressed urgently. It is vital to ensure that people in all categories are treated fairly, particularly those living on lower incomes who are hit by unexpected fees or stuck in accounts that do not give them the best deal for fear of being hit by switching fees. The measures go some way to achieving that and, therefore, we are happy to support them.