Financial Services and Markets Bill (First sitting)

Siobhain McDonagh Excerpts

Committee stage
Wednesday 19th October 2022 Public Bill Committees

[Gareth Davies]

Q Thank you. Sarah, how do you believe the secondary competitiveness objective might change your behaviour and your policy making?

Sarah Pritchard: From an FCA perspective, it is very much as Sheldon has said. It is important to say we support the Bill as it is currently framed. We think a secondary competitiveness objective can work alongside our primary statutory objectives. It will give us another lens through which to look at the policy work and the development of the regulatory agenda that we are taking forward. Back to the points raised previously on transparency and accountability, it will give us another method by which we will be reporting and considering our outcomes against. We will take that into account. We think it can work as a secondary objective.

On the various elements that make up competitiveness that have been touched on earlier, I think that innovation and ensuring that we can stay ahead of the game with the pace of development across the financial services markets is really important. You can see the financial markets infrastructure sandbox proposals contained within the Bill. There are proposals there on critical third parties as well, so you can already see on the face of the Bill in those particular areas a real desire to make sure that the UK can stay in lockstep or stay competitive as a country enabled through the way in which the financial services regulatory framework is developed going forward.

I think the agility is important. We often hear that regulators are too slow. Sometimes we hear that regulators are too fast in terms of putting out too many consultations. Clearly there is a balance there. We have shown ourselves able to act at speed through the Russia-Ukraine conflict and introduced new rules on side pockets to enable support in that context of war. We will need to maintain that flexibility to be agile when we need to, while retaining the checks and balances that are really important in terms of transparency and accountability.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Q The FCA announced in June that you would be strengthening the protection of access to banking services. Some might say that this was closing the stable door after the horse has bolted, given that 50% of branches in town centres have now closed. What powers does the FCA currently have to protect banking services, and why were you not doing that before?

Sheldon Mills: Thank you very much for the question. The first framing point to this question is to understand that banking services have and are changing, and there are many, many benefits of those changes. The move towards digitalisation of banking services provides a huge amount of support to many people who are vulnerable. My mother is deaf and the change to a digital means of banking services has transformed her life completely.

The starting point must be that we have to consider the variety of ways in which people can provide banking services. That said, we know that, locally, branches can be important for communities. It is not just branches. It is a point at which people can deposit money and take out money. You can have a variety of those. They can be branches or post offices. They can be what we are trying to encourage the industry to develop when they close branches.

[Siobhain McDonagh]

Q Sorry, but my question is: what powers do you have and what are you doing?

Sheldon Mills: I am coming to it. In the light of that, what we have sought to do as we have seen firms decide to close their branches in the face of changing to digitalisation—there is the cost of keeping branches, which are very underutilised—is ensure that they look very closely at the alternatives to those branches when they go through those closure plans. We have had branch closure guidance in place for almost a year now. We work very closely with all the largest lenders and institutions to monitor their branch closure activity and ensure that they are providing appropriate services to those who need them in those localities as they seek to close some of those branches.

In terms of access to cash, the majority of the population—99.7% of the UK population—is within 5 km of a free-access cashpoint. We welcome the Government’s proposals on access-to-cash legislation so that we can get greater powers to ensure certain aspects of access to cash.

[Siobhain McDonagh]

Q I am really pleased that your mother gets good access to banking services. Unfortunately, that does not extend to a lot of the people in my constituency who do not feel able to use online services, either because they do not have access to the internet or know how to use the internet or because they are frightened because they are worried about being scammed. As I understand the current rules, it is only when the last bank in town closes that there is there any consideration of banking hubs or other facilities. That is far too late for the vulnerable customers that my hon. Friend the Member for Kingston upon Hull West and Hessle referred to in her earlier question. What power does the FCA have to do something real to help those excluded customers, and what extra powers would you need in order to make that real?

Sheldon Mills: We are using our existing “treating customers fairly” principle in order to put pressure on banks to ensure that they are looking after those customers that you talk about, who are vulnerable, in those communities and providing them with alternatives to branches if they close. Our updated guidance, which is stronger, asks for those alternatives to be in place before they close that last branch in town. It also deals with partial closures and issues such as that. I have been out to many local communities in order to see the impact of branch closures, and I have been public in terms of saying to the banks that they need to pick up the pace in relation to the alternatives for those communities: banking hubs, mobile banking and other activity. We are working very closely with LINK, which is currently helping the banks with the banking hubs, and seeking to get them to pick up that pace.

[Siobhain McDonagh]

Q But you are not slowing the number of branch closures, and people are still experiencing these difficulties in Mitcham. Please: I would love you to come to Mitcham—

Sheldon Mills: I would be very happy to do so.

[Siobhain McDonagh]

And I will show you around. It is a great place. I will even buy you lunch in one of the cafés.

Sheldon Mills: I am sold—I will come.

[Siobhain McDonagh]

Q In the case of the Halifax, I could not even convince the Halifax to come to a public meeting to talk to people about their experiences. The banks are just carrying on in the way they have always carried on—with hope of some service tomorrow. We are told that the post office will be great, but what if the post office is not accessible? What if people are worried about accessing cash right in the middle of other people and fearful of not being able to hang on to their money? What if they are disabled and just cannot get into their post office branch? These are the things that are really happening, whatever the current regulations are.

Sheldon Mills: Yes, these are real, genuine issues for people and I do understand them. We have researched some of the ways in which people access cash but also branches. It is important that all the institutions—I will not mention individual institutions—should be willing to speak to their customers and their communities as they close branches, because that is the way to understand what alternatives they need to be providing to those services. We recently worked with a major provider and we got it to pause its branch closures while it made a significant assessment and researched the needs of the local community, and then it was able to provide for that, so we are proactive in relation to this. I would be very happy to come to Mitcham and understand what is going on there.

[Siobhain McDonagh]

Q Lovely. You will be very welcome; the people there would love to meet you. Finally—I crave your indulgence, Mr Sharma—I want to ask about access to cash. For most people’s constituents, access to cash is only any good if it is access to free cash withdrawal.

[Emma Hardy]

Yes.

[Siobhain McDonagh]

If people have to pay £1.99 every time they try to access £10 from a machine to keep them going for the week, that is a huge premium on being poor. In Pollards Hill in my constituency, we have only two pay-for machines, and that is what happens on a daily basis—people have to pay £1.99 for every bit of money that they get out. People take small amounts of money to try to control their budgets. We were delighted when the Co-op came to the parade, but it could not get free cash machines because its lease prevented it from having one.

[The Chair]

Order. I am afraid that brings us to the end of the time allotted for this panel.

--- Later in debate ---

[Siobhain McDonagh]

Can we just have a few words about free cash?

[The Chair]

No. That is the time allotted for the Committee to ask questions.

Sheldon Mills: We would be very happy to write to you.