Financial Services (Banking Reform) Bill

Debate between Stephen Doughty and Cathy Jamieson

Wednesday 11th December 2013 Commons Chamber

[Cathy Jamieson]

We pressed for an earlier introduction of the measure so that we could debate and finesse it if necessary. However, the Government were prepared to move only at the last minute, through a successful amendment in the other place, and it is disappointing that they now want to strike it down.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is making a strong case. I, too, served on the Committee and witnessed our efforts on this matter. Why have the Government been on the back foot throughout the process? We are talking about the culture of banking, but I wonder whether there is an issue with a Government culture of continual caution, rather than the challenge that ought to be presented to some of those interests in society that have failed our country.

[Cathy Jamieson]

I thank my hon. Friend for his comments. I do not know what was in the Government’s mind, but in Committee the Bill was very thin. We raised the matter on a number of occasions, but the Government resisted every attempt to amend the Bill in Committee, apart from on one minor detail. In retrospect, that is not the way to produce the best possible legislation. The Bill will undoubtedly have been improved by the end of the process—I do not detract from the work that has been done—but it would have sent a stronger message to the general public and the financial services industry that this place took the matter seriously if the Government had accepted amendments at an early stage.

--- Later in debate ---

[Stephen Doughty]

I apologise for omitting to mention my membership of the national committee of Movement for Change, which has been campaigning on this issue, Madam Deputy Speaker.

Does my hon. Friend share my surprise at the continual chuntering from the Government Benches? As she rightly says, there has been an explosion in the past few years on this Government’s watch, and they have been dragged, kicking and screaming to this point. I have seen an explosion of these stores on high streets across Cardiff, and an explosion in cases of people who have got into trouble with payday lenders.

[Cathy Jamieson]

My hon. Friend makes valuable points, which I will come on to address.

The Government opposed the proposals initially, but eventually gave in and passed their own amendments in the other place. The FCA has so far failed to use its powers to introduce a cap. There were concerns that unless pressure was applied it would not necessarily have been able to speed up new powers, and we could have seen a further delay in real-time monitoring across the high-cost loan sector. That is why, some months ago, the Leader of the Opposition promised to introduce a cap. He also suggested an extension to a levy on payday lenders’ profits, which would be used to double the level of Government funding for alternative low-cost providers, such as credit unions, for those struggling with the cost of living crisis.

--- Later in debate ---

[Cathy Jamieson]

I thank my hon. Friend for his kind words about my comments. I am simply putting forward the views brought to us by the people at the sharp end who have experienced the worst problems from payday lending. I pay tribute to those people again for doing so. I agree that it would be wonderful if we could secure some further consensus on these problems and send a clear message to the industry, particularly on advertising. The advertising spend of the top five payday lending brands apparently stands at about £36 million a year. That seems to suggest that they are investing heavily in attracting new borrowers at the same time as being not quite as willing to invest in responsible lending.

[Stephen Doughty]

My hon. Friend has made an important point about the amount of money such companies are investing in advertising. Many Members will have noted how much investment those companies are putting into advertising in football. Fans are targeted, which I think is particularly heinous, and a number of organisations have campaigned against that. Does she agree that football clubs should resist that type of advertising, which will put their supporters into great debt?

[Cathy Jamieson]

My hon. Friend tempts me to talk about football, which is one of my favourite topics. I will resist that temptation, except to say that I share his concerns about that.

Returning to our amendments and what the industry could do, I understand that there are differences of opinion about how best to tackle the problem. As we have seen, however, technology is available. The Veritech software is, I understand, used in 14 states in the US. Arguably, lenders would have the resources to bring that in if they wanted to. If lenders will not do something voluntarily, surely it will make sense to require them to do that, because in the meantime consumers are falling into debt. The Government should therefore act as soon as they possibly can.

Interestingly, we have heard that this issue is not just about the impact on consumers. The 118 118 company has told us that it believes the introduction of data sharing would enhance levels of competition, arguing:

“It is probable that if real time data was available, and lenders could be more confident in their lending decisions, many more of them would be attracted to this market segment. We would hope and expect that the FCA would be very cognisant of this point in view of its explicit competition objective”.

That is an interesting view. Where lending is being done, we want to know that it is being done by reputable companies, backed up by the proper technology and proper principles.