Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Committee: 1st sitting (Hansard): House of Lords
Wednesday 19th July 2017 Lords Chamber

[Baroness Coussins (CB)]

My Lords, I support Amendment 1, and remind the Committee of the interest I declared at Second Reading as president of the Money Advice Trust, the national charity that provides free debt advice to individuals and small businesses through the National Debtline and the Business Debtline.

Amendment 1 corrects a notable omission in the Bill. Although the Bill requires the SFGB, as one would expect, to produce an annual report on its activities each year, there is no such provision for it to publish its business plan. Amendment 1 rectifies this quite effectively—and, perhaps more importantly, requires the body to consult on the preparation of this plan.

The Government have stated their intention that the SFGB should work in a consultative and collaborative way. Indeed, there are references to working with others elsewhere in the Bill. Amendment 1 would simply embed this consultative approach in the organisation, from the business plan down, and help set the appropriate culture in what will be, after all, a new organisation. I hope that the Minister will agree that this is a helpful amendment and give it serious consideration.

[Viscount Trenchard (Con)]

My Lords, I shall also comment on Amendment 1, proposed by the noble Lord, Lord McKenzie. I am not quite sure that I understand clearly everything it is trying to achieve.

I agree that to outline the business plans for a minimum of three years is a sensible move. Indeed, if that is not done and there is no requirement to outline the business plans, it is quite possible that those plans will not be adequately prepared. If they are prepared, it should also be clearer what efficiencies and savings could be achieved resulting from the merger of the three bodies. It is rather disappointing that the Government could say only that the costs and charges to the levies could be looked at and savings might be found in future, but in the short term the total charges to the levies would be roughly equivalent to what they are today. Perhaps the requirement to produce business plans would make it clearer where savings and efficiencies could be derived.

I am also not quite sure that the noble Lord’s amendment passes the necessary clarity test. In proposed new paragraph (b), “follow consultation” is a bit vague. What consultation and with whom? Proposed new paragraph (c) says it must,

“be informed by a comprehensive assessment of consumer need”.

Who provides such assessment, and in what detail? It is almost open ended. While I am sympathetic to the noble Lord’s amendment, I could not support it in its present form.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank the noble Lord, Lord McKenzie, for tabling these amendments on the establishment of the body, and the noble Baroness, Lady Coussins, and my noble friend Lord Trenchard for their contributions. The approach we have taken to the legislation is to create a high-level framework that enables the body to be responsive in its focus. I welcome this opportunity to talk in more detail about the transition from the existing services and how the body will operate going forward.

Amendment 1 seeks to specify requirements that must be met in relation to the single financial guidance body’s business plans. Those requirements would be that business plans should cover a forward period of a minimum of three years and be updated annually; plans should be informed by an assessment of consumer need; and plans should be subject to public consultation.

The Department for Work and Pensions’ arm’s-length bodies are required to produce corporate strategies covering a forward period of three years. Corporate strategies must incorporate a detailed business plan for the first year. The business plan is then updated annually and discussed with the sponsor department before sign-off by the body’s board. Corporate strategies and annual business plans are published and placed in the Library of both Houses. These requirements reflect Her Majesty’s Treasury guidance that applies to all arm’s-length bodies across government. As for other Department for Work and Pensions-sponsored bodies, these requirements will be written into the framework document that will be developed in the run-up to launch and agreed with the chief executive officer of the body. It will be reviewed regularly thereafter and will be published by the body.

The other requirements specified in Amendment 1 would make it necessary for the body to carry out a comprehensive assessment of consumer need to inform its business plans, and to consult on its business plans. I agree it is important for the single financial guidance body’s plans and activities to be informed by robust data, and information about its customers and their needs. There will also be aspects of the body’s work on which consultation will be helpful. Indeed, existing services have been developed and evolved based on data, research and consultation. We will ensure that this intelligence and experience are not lost in the transition.

As part of its functions, the body will liaise with stakeholders at strategic and operational levels all the time. This will include partners across the financial services industry, the devolved authorities and the public and voluntary sectors, informing the body’s thinking as it puts its plans together. The existing services regularly consult on matters which seek to assess consumer need without a statutory requirement to consult; for example, this week MAS published a consultation on debt advice commissioning. The body will work in a complex landscape. Without consultation on its plans and assessment of consumer needs, it would be failing in its objectives, set out in Clause 2(8), if it did not continuously assess the needs of the public and consult widely on its activities.

--- Later in debate ---

[Viscount Trenchard]

My Lords, my noble friend Lady Altmann has done us a great service by tabling her amendment and the others with which it is grouped, but I am not sure that the issue is as simple as all that. It clearly is not, and I fear that it will be difficult to solve all these problems. It is not just that there is a significant difference between the words “advice”, “counselling” and “guidance” in the way that most people understand them. It is a pity that the good, much used and understood word “advice” has been partially hijacked in that it is part of a regulated activity when it is financial advice. “Counselling” has another connotation and insinuates that the person may also be suffering from some mental illness or disability. “Counselling” is also probably one of the most commonly misspelt words in the English language, because people confuse counsellor and councillor, and it is not so well understood or used.

My noble friend’s amendments do not just replace “advice” with “guidance”—I am not sure whether, to the man in the street, one is clearer than the other. I understand the problem about the regulatory meaning of “financial advice”, but sometimes we have “guidance” and sometimes we have “counselling”. In Amendment 21, my noble friend refers to “individualised independent financial advice”. In that amendment, she seeks to improve,

“public recognition of the distinctions in personal finance terms between ‘education’, ‘information’, ‘guidance’, ‘counselling’ and ‘individualised independent financial advice’”.

I fear that it is extremely unlikely, without huge expenditure and alteration to the schools programme at all levels, that we will get anywhere near an even basic understanding among the public of the difference in meaning between those terms. In Amendment 38, we have distinctions between “advice” and “guidance”, but does “advice” mean only an activity regulated by the FCA? If so, that is a matter for regret, because “advice” is a very good word.

My noble friend is quite right to table the amendments. As was noted by several noble Lords on Second Reading—I apologise for not having been able to participate due to another pressing appointment—the Government have to consider carefully before deciding on the name and branding of the new body. People go to the citizens advice bureau, not the citizens counselling bureau, to get all kinds of advice, including advice on debt. I note that the Citizens Advice website avoids using the term “debt advice”, preferring to talk about help with debt, although I believe that this gives the impression that the CAB can easily provide the panacea of debt relief through an individual voluntary arrangement. This is complicated, and my noble friend is quite right to raise it.

--- Later in debate ---

[Lord Sharkey]

My Lords, in moving Amendment 7, I shall speak also to Amendment 23. These amendments, in my name and those of my noble friends Lady Kramer and Lord Kirkwood, concern debt moratoriums, and cold calling for the benefit of debt management services and pensions providers or advisers.

Both issues were discussed extensively at Second Reading. Along with other noble Lords, we asked why there was no provision in the Bill for a debt moratorium or a ban on cold calling. I made the point that much cold calling for fee-paying debt management services has been found by the FCA to be misleading and damaging and affected the most financially disadvantaged. I also noted that we do not allow cold calling for mortgages and we should not allow it for debt management, pensions or claims management.

The problem represented by cold calling is getting worse. Truecaller, a call-blocking service, produced research last week that shows Britain’s cold-calling nuisance to be the worst in Europe. The number of spam calls has risen by an astonishing 180% in the past 10 months. We are now bombarded with 2.6 million calls a month—more than 31 million calls per year—despite new rules intended to limit the problem. This is a completely unsatisfactory situation, as is the absence of a debt moratorium.

In her Second Reading response, the Minister acknowledged the merits of a debt moratorium. She said:

“A breathing space scheme could help people affected by serious debt by stopping creditor enforcement and freezing further interest and charges on unpaid debt”.


A stronger version of this statement appears as a commitment on page 60 of the 2017 Conservative manifesto. The Minister went on to say:

“However, breathing space legislation would be lengthy and complex. As such, any breathing space legislation would need to be properly prepared and consulted upon, and Treasury Ministers will outline further details in due course”.—[Official Report, 5/7/17; col. 943.]


This is not promising. The two-year legislative programme in the Queen’s Speech does not provide a suitable legislative vehicle for future action on breathing space. This is not at all surprising when you consider the complexity of the inevitable difficulties with the Brexit Bills that were in the Queen’s Speech, but it is bad news for those in serious debt.

The Minister said much the same things and gave the same reasons for not producing the already promised ban on cold calling for pensions. She said:

“It is a complex area that requires careful and detailed consultation with stakeholders during the year. In particular, there are questions of how to define existing relationships and how to deal with referrals and third parties. As such, we do not propose to include a cold-calling ban in the Bill at this time”.


Again, this is very disappointing. As the Minister noted, pension scams can cost people their life savings and leave them facing retirement with no opportunity to build up their pension savings again. That is a catastrophic risk. Surely it is the duty of government to act very quickly to protect people against that risk.

The Minister was equally discouraging about cold calling by CMCs. She said simply that,

“strengthening the regulation of claims management services should reduce the number of nuisance calls”.—[Official Report, 5/7/17; col. 944.]

She said “should” not “would”, and “reduce” not “stop”. This is entirely unsatisfactory, as the airline and holiday industries are currently and loudly pointing out. The huge and absurd rise in claims for food poisoning while on holiday abroad is a clear example of cold-calling abuse.

Our amendments address both the breathing space and the cold-calling issues. We would have preferred to amend the Bill to institute the former and ban the latter, but the scope of the Bill is narrow and to stay in scope our amendments stop short of that. Instead, Amendment 7 allows the SFGB to advocate to the Secretary of State that a breathing space be introduced. Amendment 23 requires the SFGB to publish an annual assessment of,

“the extent to which consumer detriment is caused”,

by the absence of a breathing space and a ban on cold calling for the benefit of debt management services and pension providers or advisers.

However, these are only approaches to a resolution. There is a better way. The Government could table, later in Committee or on Report, a simple amendment which gives the Secretary of State the power to bring forward secondary legislation to introduce a debt moratorium and to ban cold calling for DMCs, pension providers and advisers, and CMCs; with a corresponding and minor tweak to the Long Title. It is perhaps a little unusual for an opposition party to suggest a Henry VIII clause to the Government; the convention is normally that it is the other way round. But since it is clear that the Government agree in principle with these moves and the only barrier is one of time, we could use this legislative vehicle—the Bill before us—to achieve what the Government have already promised.

If the Government do not do this, we see no likelihood in the next two years of helping those seriously in debt or in danger of being fleeced by cold calling. That is much too long and quite unnecessary. We should use the Bill to give the Government the power to protect those at risk. This is in the Government’s hands. Might I suggest that we meet to discuss this unusual proposal as a matter of urgency? I beg to move.

[Viscount Trenchard]

My Lords, I have some sympathy with the amendment moved by the noble Lord, Lord Sharkey, to introduce a breathing space, and I have very much sympathy and agreement with his proposal that cold calling should be banned. He is right to say that cold calling has become a complete menace. It has, and it is getting worse by the month. I receive all kinds of spam texts and calls to my mobile, telling me I have debts and saying, “Would you not like us to help you repay them or have them written off?”. These people are a complete menace. The worst thing is that young people are taken in by them.

Of course, a lot of the problem is caused by lenders putting out offers of very cheap money to hard-up people, young and old, who are tempted to take advantage of 0% for 20 or 24 months. Then in very small type somewhere at the bottom it says that, after a relatively long period, the interest rate applicable to these loans will change from 1% or 0.8% to an APR of anything from 25% to 37%, or even higher. I would think it utterly reasonable that some kind of moratorium be put in place to protect people who have been tricked into taking out loans of the kind that I have just described.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 6th September 2017 Lords Chamber

[Baroness Hollins (CB)]

I add my support, but I wish to take this a little further. Older people are not the only members of the public who rely on easy access to cash in order to manage their daily budgets. People are now being required to use chip and pin instead of a cheque to obtain cash in a bank, which is not possible in a post office. The risk of chip and pin for many vulnerable people who have limited capacity is that it opens them to exploitation. They are more at risk of scams and other kinds of financial exploitation. It is just putting some more vulnerable people at risk. This is a wonderful opportunity to address the risk that many people now being encouraged and empowered to live more independently in the community could lose some of that independence.

[Viscount Trenchard (Con)]

My Lords, I well understand the objectives of the noble Lord, Lord McKenzie, and I have the greatest respect for what he is trying to achieve and for other noble Lords who have supported these amendments. However, we need to be careful not to make the legislation too complicated. I am not quite sure that I really understand the difference. The noble Lord is trying to include the need to provide information on financial capability. He is talking about financial inclusion and financial exclusion. The Bill already includes the need to have regard to financial capability. I am not quite sure that financial capability is the best way to describe what is meant. I think it is intended to mean financial literacy or financial awareness. Financial capability implies having financial assets. I therefore find it a little confusing. We have financial capability in the Bill anyway, which I do not think is perfect, and are now talking about adding financial inclusion and financial exclusion. The noble Lord’s definition of financial exclusion in Amendment 39 includes reluctance to seek appropriate advice. I do not fully understand why, if somebody is reluctant to seek the advice or guidance that sensible people tell him he should seek, that means he should be regarded as being financially excluded.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am happy to follow the noble Viscount, Lord Trenchard. His point is understandable but it is more easily understood in the context of the ad hoc committee’s report on financial exclusion. We have had some response to that, already adverted to by the noble Baroness, Lady Coussins, and it is a great leap forward to have a Minister to whom we can now address some of these issues. But as the noble Lord, Lord McKenzie, was saying, what is missing is an overall strategy into which the differences he was trying to analyse can fit more comfortably. Absent a strategy, the Committee is perfectly entitled to try to make what it can of this important Bill—which is an important part, although not the whole, of the strategy—in order to expand the envelope as much as we can. These amendments do that. The speeches we have heard so far from colleagues support that, and I support these amendments.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Monday 11th September 2017 Lords Chamber

[Lord Sharkey (LD)]

My Lords, I will speak very briefly to Amendments 58, 60 and 61, tabled by my noble friend Lady Kramer and me. We agree with the Bill’s requirement in Clause 7(1) that the SFGB must monitor its own compliance with standards and that of its delivery partners. However, we feel that the results of this monitoring should be in the public domain; in fact, it would be extraordinary if they were not. Our Amendment 58 would rectify what seems to be an omission. It says simply that the SFGB must produce and place in the public domain an annual report of its assessment of its own, and its delivery partners’, compliance with the standards. We hope that this is completely uncontroversial and the Minister will feel able to accept the amendment.

Amendment 60 is equally simple and straightforward. In Clause 7, dealing with the monitoring and enforcement of standards, and in subsection (3), the Bill lists those to whom the FCA must provide a report on its review of whether the standards continue to be appropriate and how the SFGB is monitoring and enforcing those standards.

The Bill specifies that the FCA must provide its report to the SFGB and to the Secretary of State, but there is no mention of Parliament and we think there should be. Parliament will have set up the SFGB. It is a matter of transparency and accountability that Parliament should also have sight of the FCA’s report. Our amendment simply adds Parliament to the list of those to whom the FCA must provide its report.

In Clause 7(4), the Bill provides that the FCA’s report may contain recommendations to the SFGB. But that is it—the Bill does not say what should happen when the SFGB is in receipt of these recommendations. Clearly, something should happen and it should happen in public. Our Amendment 61 provides for this. It simply says that when the SFGB is in receipt of recommendations in an FCA report on its review, the SFGB must then publish a substantive response within three months to any recommendations made by the FCA.

The changes proposed, I hope, in all three amendments are completely uncontroversial. They are nothing more than an application of the principles of transparency and accountability to this new public body. We hope that the Minister will see their merits and feel able to accept them.

[Viscount Trenchard (Con)]

My Lords, I have some sympathy with the amendment moved by the noble Lord, Lord Stevenson, which reflects the concerns expressed by StepChange. I understand that the SFGB is to carry out its commissioning function by setting standards for advice, whereas I think the Bill casts the body in the role of a kind of second regulator. That is also made clear by the amendments of the noble Lord, Lord Sharkey, which deal with the same thing. I worry whether the SFGB will become too like the FCA in terms of its culture. I had understood that it would set the standards which would enable the right partners to be commissioned, but if it has too many powers to act as a regulator, I am concerned that it will become more like the FCA and less sympathetic to consumer concerns.

[Baroness Meacher (CB)]

My Lords, I have added my name to this amendment; I simply want to express my strong support for it, and to endorse the comments made by the noble Lord, Lord Stevenson. I apologise to the Committee because I was unable to be in the Chamber for the debate on the previous group of amendments where again, I had added my name. The debate was important and I hope that we will come back to it on Report.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 13th September 2017 Lords Chamber

[The Earl of Kinnoull (CB)]

My Lords, as usual, the noble Lord, Lord Hunt, is right on the money and I do not disagree with a word that he said. I would add one tiny little thing: the net effect of the MROs and the CHCs is that they add to the cost of motor insurance in this country so that poorer people who struggle to pay their motor insurance will find it further away from them. For that solid reason, I strongly support the noble Lord’s two amendments.

[Viscount Trenchard (Con)]

My Lords, I, too, offer my support to my noble friend Lord Hunt. I agree with his two amendments, which seek to attack one of the major menaces of the spurious claims activity in our society at present. Does my noble friend the Minister think that the FCA is qualified and able to take on all these extra tasks? Will there be a new category of authorised person within the FCA? The skills required to regulate CMCs of various kinds may not be exactly the same as, for example, those required to give financial advice. It is also worth checking that there are not any other areas of spurious activity or the encouragement of spurious claims which are already being practised by unscrupulous people.

[Lord McKenzie of Luton (Lab)]

My Lords, as we have heard, these amendments would add two types of services to be brought within the definition of claims management services and hence within the regulatory provisions provided for in the Bill. The amendments were introduced with some passion. We support both of them.

We heard from the noble Lord some of the unacceptable behaviours of those delivering these services which warrant such inclusion. As part of the rampant compensation culture, we have heard about holiday sickness claims, which we will come on to debate, and artificial claims being stirred up by advertisements. Of course, medical reporting organisations and credit hire companies are involved in the claims process for road traffic accidents, providing medical reports and temporary replacement vehicles—an important service, perhaps, but it should be undertaken and conducted properly.

By way of background, we make it clear that we support the provisions in the Bill which enable the regulation of CMCs to transfer to the FCA but need to be reassured that it will be properly resourced to meet the totality of its new tasks—a point touched on by the noble Viscount, Lord Trenchard. The FCA currently regulates around 56,000 authorised financial services firms.

At present there is an exemption, which the noble Lord, Lord Hunt, touched on, from the regulation for claims management companies which employ solicitors on the grounds that such entities are under the jurisdiction of the Solicitors Regulation Authority—which, incidentally, bans cold calling. However, it is suggested in some quarters that the SRA regulation is less rigorous than the current MoJ regulation of CMC activity and as a consequence some CMCs are changing their business structures to take advantage of this. Is the Minister satisfied that there is no weakening of the regulation through this route?

There is another, tangential matter I would like to raise, of which I have given notice to the Minister—frankly, seeking a meeting rather than a detailed answer to an amendment. This is to do with tax refund companies. These are businesses which help people who have had too much tax deducted at source from their wages complete and submit the paperwork required by HMRC to claim back the overdeducted tax. There is absolutely nothing wrong with that—it is a vital service. This will include employees who have spent their own money on tax-deductible employment expenses; for example, care workers who do mileage in their own cars. Tax refund companies generally make their money by making high volumes of low-value, simple claims that they charge fees for. While some of these tax refund companies make sensible claims and charge proportionate fees for the service they provide, others are less scrupulous. It is these which we want to focus on. It is worth noting that tax refund companies’ bread-and-butter activities—refunds based on unused personal allowances —have recently been curtailed by HMRC’s auto-reconciliation service, which makes it harder for them to stay in business.

How do the companies work? There are some similarities with the points made by the noble Lord, Lord Hunt. They are mainly online businesses, typically with fun and appealing websites that contain eye-catching claims such as “Let us maximise your refund” or “We make claiming your refund easy”. They may somehow imply that they have an inside track with HMRC. They often pay for advertising space so that they appear at the top of search engine results, where their ads are not necessarily distinguishable from organic search results by those who are not IT-savvy. The costs vary but there can often be two elements: a minimum admin fee—the Chartered Institute of Taxation says that it has recently seen a minimum fee of £90—and a charge based on a percentage of the refund, such as 20%. Percentage fees of up to 40% for relatively straightforward claims have been seen, which are a scandal. The company will normally mandate the refund back to itself in the first instance and collect its fee before transferring the balance to the individual. Often, the two fee elements taken together will outweigh the tax refund if it is small. Sometimes the companies add on charges for transferring money to a bank account, which they are not always transparent about. The pricing structure incentivises poor practices such as putting in inflated or fraudulent claims.

Who do these companies target? It can be workers who are unaware of or confused by the rules around when a refund might be due. The work-related travel expense rules are a particular example. It can be people who may have an inkling that they are due a refund but who lack confidence or knowledge of the tax system to initiate a claim themselves, or those who could probably organise a claim but do not have the time or the inclination.

Some tax refund companies meet a genuine need in the market and operate according to appropriate standards but the area is unregulated, like the issue we have just been debating, and there is a huge spectrum of providers. The Chartered Institute of Taxation’s report on tax refund companies identified a range of consumer protection issues with some of the more exploitative agents and made pages of recommendations. While some of these were taken up, many were not. We acknowledge that HMRC has invested in improvements in certain areas by offering online channels to apply for refunds, restricting agent access to taxpayers’ pay and tax details, and dealing with refund agents who gave the impression that they were in some way affiliated to or approved by HMRC. However, tax refund companies continue to proliferate, which suggests that things are still too complex or that taxpayers are still being swayed because of things such as overinflated promises or misleading information as to fees.

I apologise for taking the Committee’s time to focus on this issue. I was not quite sure how to address it otherwise. My purpose is to give this an airing and to seek from the Minister the opportunity of a meeting in due course, together with the Chartered Institute of Taxation and the Low Incomes Tax Reform Group, to delve further into the issue. Having said that, I reiterate that we support the two amendments proposed by the noble Lord, Lord Hunt, and do so enthusiastically.

--- Later in debate ---

[Baroness Altmann]

My Lords, I, too, support my noble friend’s Amendment 70A. He has highlighted a very important issue. It is right that in Clause 17 the Government are looking to cap the charges made by claims management companies, but this should apply to personal injury claims as well as those for financial products and services. The cap on charges is also important because there will be problems in future associated with the increased use of the small claims track when it is extended to cover cases up to £5,000 for personal injury claims.

I was going to quote the same figures as the noble Earl, Lord Kinnoull, but I have also heard from a number of holiday operators and other representatives of the travel industry that resorts are now threatening to sharply increase prices for British holidaymakers or even withdraw all-inclusive packages from the UK market altogether. This situation is damaging the reputation of British holidaymakers and I support my noble friend’s amendment.

[Viscount Trenchard]

My Lords, I, too, strongly support my noble friend Lord Hunt’s amendments. I was completely horrified to hear the statistics relayed by the noble Earl, Lord Kinnoull. It does not surprise me because I travelled to Spain last summer—not on a package tour but they nevertheless somehow know where you are and I started to receive unsolicited texts and emails from people inviting me to make claims for the bad food or being sick. I just deleted them, of course.

I also agree with my noble friend Lady Altmann that, where possible, the cap on fees should be broadened because I would have used a CMC to pursue a claim against an airline. This was not this summer but the summer before, when our flights were cancelled and I tried to get refunded by an airline. My daughter had booked on the same flights through a different travel agent, but in the end neither of us has made a successful claim, although we are both entitled to. It was too difficult because the airline had contracted the flight to another airline. When you are entitled to a refund for a service that was contracted but not delivered—as in the cancellation of a flight—then, as the Committee is well aware, it is made extremely difficult for you to receive reimbursement. When I received an unsolicited email from a CMC about cancelled flight claims, I was quite tempted to use it. But even though I had virtually given up on the claim against the airlines, I decided not to because a quick examination of the company made me suspicious. I also thought it would absorb in fees most of what it might get back, so I decided not to proceed.

Once such companies are capped in what they can charge, I will feel much happier about using their services because of what they specialise in and because it is made extremely difficult for individuals to pursue refund claims themselves. In many areas there may be a route whereby the individual can do the same thing as a CMC, and do it for free, but it is often made so difficult. It is intended that people will get bored or be too busy to go on waiting, while listening to music and pressing “1” or “2”.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I support the amendments in the name of the noble Lord, Lord Hunt. Once again, he has made his case brilliantly and without having to resort to metaphors about drones or anything else. He seemed this time to be firing a set of missiles rather closely to his right. I am sure progress can be made on this important issue and want to make two points.

First, to pick up on the point made by the noble Baroness, Lady Altmann, in the representations that many of us have received there was a slightly larger package than just the question of claims management companies. There was a question about the small claims limit going from £1,000 to £5,000 and I would be grateful if the Minister, when he responds, could give us some better information about how that impacts on this issue. There is also a narrower question about an amendment to the public liability protocol, which I do not fully understand. But I hope the Minister will rise up in his helicopter, or whatever he is currently riding in to get to his scenic views, to give us a view of what this is about. There is an exception for claims arising overseas in these areas, which seems a little unfair because if a claim is genuine then it should be possible to mount it in whichever jurisdiction. If the package travel regulations are UK law and need to be resolved in that way, it seems odd if an exception is made for those who want to claim from an overseas position.

My other point would be that while I think we are all in the same place in wanting to see this issue resolved, I hope it will not be at the expense of genuine illnesses. The Minister might want to make sure that there is an avenue open when he comes to respond. Rather like the noble Viscount who has just spoken, I had a problem with a holiday—not a package holiday but one booked through an agent. It was in Italy, at a villa which was a nice place to be, but it became overrun with rats; I think this was on day three. So numerous were these creatures, and of such an extraordinary puissance, that they climbed up on to the veranda and entertained us while we tried to eat. They then ran round the bedroom while we tried to sleep, knocking over our toothpaste and other things in our bathroom. We eventually had to retreat to the top floor of the villa and barricade ourselves in.

The response from the locals was that they were “ratti”, which I think is the Italian for rats. We were therefore fairly clear what they were. At one point the locals produced some materials to capture these rodents. It consisted of a large plane of wood, about the size of the Dispatch Box, on which was placed some translucent gooey substance. They did not want to kill these things—they were very eco-friendly and against that—but just wanted us to capture them. But the blooming things were so strong that when one ran up and landed on that sticky substance, it could not quite get all four legs off at once but it got one limb up and then just hopped off. It was not very effective.

We sued the company that let us this property. The interesting thing about suing holiday companies—I am sorry, this is a long way into my point—is that holidays exceptionally attract damages because holidays are not repeatable instances. In other words, under English law you can claim for exemplary damages for a holiday lost in a way that you cannot for other damage. That is an issue that need not detain us in the Bill, but given that that particularity exists in the law, I hope that the sense of the amendments would not damage genuine claims. Illness does occur on holiday, and sometimes rats invade, and we would want to make sure that people can sue properly and, given that it was a holiday that was spoiled, get the additional money available without any recall or loss.

--- Later in debate ---

[The Earl of Kinnoull]

My Lords, I strongly support the noble Baroness, Lady Altmann, and I thank her for allowing me to add my name to her amendment. Obviously, I also strongly support the thinking behind the amendment in the names of the noble Lord, Lord Sharkey, and the noble Baroness, Lady Kramer, and I just wish to add one or two points.

There was a very helpful Which? report in November 2016 detailing the full horror of nuisance calls in the UK. For the report, telephone calls in 18 cities were sampled. In 17 of the cities—the survey took place over a long period—more than a third of all the private phone calls were nuisance calls, and in Glasgow, which topped this terrible table of nonsense, more than half of the calls in the sample were nuisance calls. The top type of nuisance call was about PPI, which of course is firmly a CMC nuisance. In commenting on the November 2016 report, Keith Brown MSP, the relevant Scottish Minister, was quoted as saying:

“These calls are a serious problem that can cause both emotional and financial harm, particularly to some of our most vulnerable citizens”.


A very horrible statistic in the report was that four in 10 people in Scotland who had received these calls felt intimidated by them. It is barbaric behaviour.

I was delighted to read in their manifesto what the Conservatives are going to do about cold calling on pensions. Like, I think, every other noble Lord in the House, I feel that we must use this opportunity to extend the ban to this area as well. I suppose that it is the businessman in me who does a quick upside/downside analysis. My upside analysis has a reduction of emotional and financial harm and intimidation, and my downside analysis has nothing. Perhaps the Minister could tell me whether she agrees with that analysis. I hope that she feels as I do—that it is a social necessity that we carry through one or other of these amendments and put it in the Bill.

[Viscount Trenchard]

My Lords, I too express support for both the amendment proposed by the noble Lord, Lord Sharkey, and that proposed by my noble friend Lady Altmann, supported by the noble Earl, Lord Kinnoull. I ask my noble friend the Minister to consider both amendments sympathetically. I expect that she is likely to say that she agrees with the amendments in principle but that this is not the time or the place for such a measure. However, surely it would be popular with the public to introduce a complete ban on unsolicited cold calling across a broad range of activities.

The Law Society and the ABI have both called for a crack-down on nuisance calling of all kinds. ABTA has also suggested that the Bill provides an opportunity to introduce an outright ban. As noble Lords are aware, solicitors, who are more tightly regulated than CMCs, are already banned from making unsolicited calls.

What I find particularly annoying is that if you answer your phone when you are overseas, you have to pay. I get so angry when this happens to me that I am sometimes more likely to start a conversation with the cold caller than I am to just hang up, which would obviously be the sensible thing to do. I say, “Do you know it’s three in the morning and I’m in Japan, and this is costing me money?”, but I find that the cold callers are not a very nice type of person in general and they are not sympathetic. My noble friend Lady Altmann mentioned that every year there are 51 million cold calls in respect of personal injury claims. In that case I am getting many more than my share, because I get about one a week.

It is a difficult area because, as noble Lords have pointed out in earlier debates, the FCA is not necessarily the most sympathetic regulator, and I agree with the noble Earl that we should look more closely at equivalent regulators in other countries. I had the privilege of serving under the noble Lord, Lord Burns, on the Joint Committee on Financial Services and Markets in 1999, which set up the FSA. We talked at great length about getting the balance right between protecting the industry and protecting the interests of the consumer. We did not necessarily get it right in the sense that the culture needs to evolve in a direction which is more sympathetic to the consumer.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Report: 1st sitting: House of Lords
Tuesday 24th October 2017 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I understand the motives of the noble Lord, Lord Sharkey, and other noble Lords in seeking to introduce a consumer protection function to the Bill. However, I believe that it places too broad and onerous a responsibility on the single financial guidance body. If noble Lords look at the functions already included in the Bill, the first three are specific. The fourth, the strategic function, seeks to improve the financial capability of members of the public by supporting the provision of financial education to children and young people—although I think that should perhaps be widened. I believe that the strategic function enables consumers to protect themselves better than they would be able to do without it.

Proposed new subsection (3E) would define cold calling as,

“unsolicited real-time direct approaches to members of the public carried out by whatever means, digital or otherwise”.

This is too all-encompassing. I would be delighted if cold calling by direct telephone and text were banned, but I am not sure that banning all unsolicited approaches is a good idea. If all unsolicited approaches were made illegal, including those by letter or email, how would a business market its services to new potential customers? Would such a draconian measure not result in severe restriction of choice for consumers? How would they know what products and services were available in the marketplace?

I suspect that the 2.6 million nuisance calls made every week—or 9 million a month; I am not sure what the figure referred to in the debate was—is a serious underestimation. What do the Government intend to do to protect the consumer from unsolicited telephone and text approaches?

[Baroness Kramer (LD)]

My Lords, perhaps I can be helpful on a couple of the points just raised by the noble Viscount, Lord Trenchard. These amendments ban solicitations in real time, as he will have noticed. That obviously excludes letters. It means that you can send information through the post; no one would wish to prohibit proper kinds of marketing. It is the nuisance and intrusion and the element of pressure that comes from that real-time activity that is the pernicious side of solicitation. That, essentially, is cold calling and is exactly what this is intended to deal with.

The noble Viscount suggested that financial education and capability are the way to go; indeed, many in the Government feel that that is the route to deal with cold calling, so that people know to hang up. However, the noble Viscount, Lord Brookeborough, was very clear in illustrating that, while we all get cold calls, we are merely the tip of an iceberg. For those who pursue this, the real focus is on people who are absolutely the most vulnerable. Being realistic, financial education and capability, even on the most extraordinary scale, would be very unlikely to provide adequate protection to that group of people who are now constantly being abused.

On the point made by the noble Lord, Lord Faulks, if this body is not associated with consumer protection, quite frankly I wonder what this body is for. That is the underlying premise that sits behind both the predecessor groups that are now being put into the single financial guidance and advice body. It is essential to bring this on to the face of the Bill in a very clear way, as it is the underlying motivation and characterisation of this body, and certainly it is a responsibility.

The noble Lord, Lord Faulks, also suggested that the Government do intend to move in this area. We have been hearing that for an incredibly long period of time and, with constant pressure, perhaps one day the Government will move. The problem is that we need protection now. We need protection in the near term because, as my noble friend Lord Sharkey, the noble Earl, Lord Kinnoull, and others have illustrated, this has grown in such scale and momentum that there are daily victims. Every day that we wait there are more victims. Since it is completely unnecessary to wait because the language in this Bill serves the purpose, then in a sense it would be extraordinary to say we will sit back and wait 18 months or two years or whatever else, allowing people to be abused. We can bring a stop to it now in a very simple and straightforward way.

If I understand the Government correctly, they are willing to look at certain targeted areas in which to stop cold calling but not to provide a stop to cold calling in each area where there is clear detriment, which is what the amendment allows through use of this new single body to identify and communicate that detriment. These organisations are so slick and quick they can move from one topic to another very rapidly—you close one door and another door gets opened. For example, we stopped cold calling on mortgages. That is an excellent example that tells you we can do it. It is straightforward. The dimensions are understood. The complexities are well-considered and we have plenty of track record to look back at to make sure that it is done well. We have all of that in place. However when cold calling on mortgages was banned, it shifted on to the next issue—currently, it is pensions, claims management and holiday sickness. Everybody can be absolutely sure there will be something new, provided loopholes are left, by simply attacking one issue here and one issue there. That is the beauty of this particular amendment: it gives us the power to deal with this whole industry, the same people and the same players.

I shall make one last remark and then sit down. I want particularly to congratulate the four noble Lords whose names are on this amendment, all of whom have been working so hard in this area. Three of them are here today, able to speak for themselves, but one of them cannot. The noble Baroness, Lady Altmann, as we know, has been a real mover and shaker on these issues, not just over cold calling for pensions—pensions are her area of real expertise and we have heard her on that—but we have also heard her in this House speaking around the much broader issue as well, which is why she has put her name to the amendment. She had a speaking engagement at lunchtime in the Midlands which she felt she could not cancel. She has not eaten lunch but run to the train station. She is on the train which pulls in to the station at 4.30 and had been greatly hoping there would be a Statement today that would delay this long enough that she could be here to join in with this particular section of the debate. I am sure she will speak in later parts of this Report.

The noble Baroness should not be left out when we recognise that the movers and shakers on this are from every side of the House. This is not a partisan or party-political set of amendments. This is a set of amendments by Members of this House who recognise their responsibility to protect those who are most vulnerable now, before more damage is done, and I hope the Government will see it that way.

--- Later in debate ---

[Baroness Kramer]

My Lords, I was glad to add my name to Amendment 8, moved by the noble Lord, Lord McKenzie of Luton. Amendment 17 is almost the other side of the coin.

I think that most Members of this House, including those in the Government, feel that financial inclusion is sufficiently important that it should be expressed through most of the financial bodies that we create. The noble Lord laid out very well the depth of the problem; others on the committee may speak to that in a moment.

It would be helpful to have clarification under the Bill, in part because we have genuine confusion. I am pretty sure that Ministers have all been under the impression that this matter is wrapped up and dealt with in the context of the powers, responsibilities and objectives of the FCA but, having talked to the FCA, they will now be aware that it has a very constrained role in this area and does not provide capacity to deal with the problem—for example, filling in gaps—that most people assume that it has.

Part of our problem, of course, is that we never consolidate financial legislation, so there is genuine confusion over who does what and assumptions that particular issues are taken care of when they are not. Financial inclusion is one of those that has fallen right through the holes, due to the mismatch of a whole variety of different pieces of legislation. This is an opportunity to provide for a body to consider these issues centrally to everything that it does. What it does is very relevant to that process. That is obviously not a complete answer to the problem of financial inclusion—that involves many others—but we have to make a start somewhere. It should now become a regular habit for financial inclusion to be addressed in each piece of financial legislation.

[Viscount Trenchard]

My Lords, nobody in this House would disagree with the idea that we must do as much as possible to reduce financial exclusion and promote financial inclusion, but, again, I am not sure that the amendments are practical. Normally, anything proposed by the noble Lord, Lord McKenzie, and the noble Baroness, Lady Kramer, is of the very greatest sense; I know that from experience going back many years.

However, I worry that to amend the strategic function as proposed to strengthen further the obligation on the new body may be just a bit too much of a burden, too onerous, too open-ended and not properly defined. It is very hard to define exactly what is financial inclusion and what is financial exclusion. Obviously, the former is a good thing and the latter a bad thing, but if the strategic function is already there to support improvement in financial capability, the ability of the public to manage debt and the provision of financial education to children and young people—although I think that should probably be to everybody—the amendment duplicates that, makes it too vague, too hard to define and, potentially, too onerous.

Furthermore, I also worry about enshrining in statute the terms,

“vulnerable individuals, families and communities”,

because there is nobody in your Lordships’ House who does not recognise that vulnerable individuals need more help and support than those who are not so vulnerable. Nevertheless, it is very hard to define, and to create a different obligation for an ill-defined set of individuals and communities from the general obligation to all members of the public may be confusing and make the legislation less clear and less effective. For those reasons, although I understand the noble Lords’ objectives, I cannot support their amendments.