Financial Guidance and Claims Bill [Lords]

Yvonne Fovargue Excerpts

2nd reading: House of Commons
Monday 22nd January 2018 Commons Chamber

[Ms McVey]

My hon. Friend makes a good point. Household debt rocketed under the previous Labour Government, and we are now ensuring that it comes down, because it is still too high. I particularly appreciate that the Bill has cross-party support, because we all know that we need to help people who are in debt.

As a result of a range of broader reforms and initiatives, such as automatic enrolment, which has increased the number of people saving into pension schemes and the pension freedoms that allow anyone aged 55 and over to take their whole pension as a lump sum without paying tax on the first 25%, the number of people looking for high-quality, impartial financial guidance continues to rise. We look forward to the new body meeting those challenges, building on the existing good work of the Money Advice Service, the Pensions Advisory Service and Pension Wise.

[Yvonne Fovargue (Makerfield) (Lab)]

Has the Minister considered whether the breathing space will apply to public as well as private sector debts, because many people find that they are pursued more vigorously by those creditors?

[Ms McVey]

While looking at this respite, we are having a call for evidence to determine how best to proceed, and no doubt the hon. Lady’s point will be raised.

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[Yvonne Fovargue (Makerfield) (Lab)]

It is a pleasure to follow the hon. Member for Chippenham (Michelle Donelan). Unsurprisingly, I will talk about debt later.

I welcome the thrust of the Bill. Consolidating the three bodies into one makes sense, but the new one must be well run. It may be a little churlish, but I would point out that the Money Advice Service has rightly been criticised over the years, not least in this place, for its attempts to duplicate the work undertaken by more experienced agencies that are better known to the public. It has spent an inordinate amount on a fancy website and on television adverts—£26 million in one year—which did little to raise its profile. After all, who apart from me remembers, “What would MA say?” in its adverts? I remember that only because I used to swear at the television when they came on.

The new body has to be leaner. The thrust of its role must be to facilitate the work of others. That is where the money should go: not on promoting itself—not on fancy adverts—but on facilitating the work of others that already have brand recognition. Frontline delivery should be key, and it should not duplicate existing services, but focus on filling the gaps using existing high-quality not-for-profit providers.

I am a little alarmed that the recent contract round included for-profit providers. I worked at a debt advice charity when A4E got contracts, and I remember what a disaster it was during those contracts. Given the recent privatisation of Carillion and the problems it has had, perhaps we should focus on not-for-profit agencies that have existed for a very long time. In fact, the 80th anniversary of Citizens Advice is coming up shortly. It has existed for over 70 years with very little funding, so it—we—can manage money.

Clause 3(10) makes it clear that the new body needs to “work with others” in carrying out its strategic function. I interpret this as meaning that it should take a collaborative approach, and I hope that that will be the case. Any standards put in place should be designed in conjunction with the relevant providers and other bodies, and designed around people’s needs—those of the people who use the service and of the people who deliver it—and what works in practice. I must say that quantity does not always equal quality and good outcomes for people using the service.

There should be different channels with different funding. People may sometimes want to start on one channel and move to another. Face-to-face access can be more important, but people sometimes need an initial contact. As I always say, it used to be a black joke in the citizens advice bureau where I worked that if someone walked in with a carrier bag with unopened bills, we would say, “Aha! That’s a debt client.” If such people cannot even open their bills, they are not going to go online.

The object of the single financial guidance body is to ensure that the public have access to good-quality, free and impartial financial guidance, pension advice and debt advice. That aim is fine, but if the new body is to work well, we must ensure that its objectives and functions are clear and comprehensive; that the governance and oversight structure, under the Department to which it is responsible, is robust; and that it does not stray into trying to raise awareness of itself and conduct its own research. I want the body to have a laser-like focus on commissioning high-quality, independent services that will help more people to avoid financial difficulty and debt.

Improvements were made in the Lords to the Bill as originally drafted, and I welcome them. For example, the consumer protection function is really vital, and I hope that the Government will not to remove the provision when the Bill goes into Committee. The same goes for cold calling. That amendment gives the new body the power to advise the Secretary of State to ban cold calling for pensions.

We have heard enough on both sides of the House to be able to say that such a ban should apply across the board. There is a strength of feeling in favour of saying that cold calling is not helping consumers or anyone else. I get cold calls asking whether I have had an accident, but I have not had an accident in my car—touch wood—for 25 years. When I had such a call last week, I got the name of the company and its telephone number, and I reported it to the Telephone Preference Service, but the TPS still could not find the company—it was a shell company—and that is not good enough.

To be fair, the Minister in the other place did listen, and on Third Reading the Government introduced their own amendment to add the objective that the new body should bear in mind

“the needs of people in vulnerable circumstances”.

That is a real move forward, but it would be good to link this more explicitly with the promotion of financial inclusion, and it is a real shame that that was missed. It is a real boon to have Ministers with responsibility for financial inclusion—they are a bit like buses: we wait for one, and then two come along at once—but there is a worry that something may fall through the cracks. I believe that the Lords Financial Exclusion Committee, which looked at this issue, was right to say that there should be a financial inclusion Minister who works across the board. How many Departments have been mentioned already today? We have heard about BEIS, DCMS, the Treasury, the DWP and the Ministry of Justice. We need somebody who can look at this across all Departments and have a proper financial inclusion strategy.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I merely make the point that my hon. Friend the Economic Secretary to the Treasury and I will be hosting the financial inclusion policy forum together. Surely the whole purpose of the response to the Financial Exclusion Committee’s report was to ensure joined-up Government by the two principal Departments holding other Departments’ feet to the fire, and I assure the hon. Lady that that is what we intend most fully to do.

[Yvonne Fovargue]

I am very pleased to hear that, but I think financial inclusion is so important on so many levels that it needs a Cabinet position, and having one Minister responsible for it would be really helpful.

I am pleased to hear about the breathing space, for which there is cross-party support. It is long overdue, and we need to ensure that it is up and running as soon as possible. We should not really wait for the creation of the financial guidance body as is proposed in the Bill, because that will be at an uncertain date and we need a timeframe now. After all, six in 10 people, while they are waiting for advice, take out more credit while they are not protected and are being chased by creditors, because it is very easy to promise something to the last person who rings them or knocks on the door.

We have to get the scheme details right, as has been said. It should not just act as a moratorium or a freeze. It should introduce a statutory repayment plan so that debtors are protected while they repay their debts, and the period needs to be long enough for the debt solution to be put in place after seeking advice. Six weeks is not long enough. Frankly, when somebody brings in all their debts, they often forget one. When people write to creditors, some reply immediately while others delay, thinking, “If we don’t bother, we can put a bit of pressure on.” Then the person finds another debt that they had forgotten about, so they have to write again and do another financial statement. Six months is the minimum amount of time to get everything back and to work out a proper financial statement that covers all creditors. Twelve months is probably reasonable, but there should be a minimum period and an option to extend. It should be a reward for those people who are doing the right thing and seeking debt advice.

The scheme needs to include all debt, including that owed to central and local government, which have the worst record on forbearance. In fact, the utility companies, which are often derided, are often better. On council tax arrears, bailiffs are called in far too early and far too often.

It is crucial that the Government get it right when replacing the Money Advice Service. Getting effective financial guidance to people early is key to improving household finances and economic security. We need a body that recognises that people often need help before they reach crisis point. Moreover, once they reach that crisis point, they need to be able to access debt advice quickly, and they need to go to the right body. It is after they have sought debt advice and have a financial statement that they will focus on budgeting for the future, so let us give them guidance after they have had debt advice, because that is when they will concentrate on household bills and what they will do in the future.

The scheme also has to recognise that it does not take a lot to push those on low income into financial difficulty and a spiral of debt. It only takes an income shock. It does not always have to be a big thing such as divorce, job loss or bereavement. It is often something simple such as the washing machine breaking down or expensive repairs to the car they need to get to work. A little resilience and savings would help to address such issues. I want a scheme that helps people save, and the new body could play its part in that. Yes, there is the savings gateway, but, frankly, that expects people to design their lives around the savings scheme, which will not work. People on a low income regularly have small income shocks and saving every month is not always feasible.

I am keen on the work of the Behavioural Insights Team and the interesting developments it has seen on how to save. For example, some supermarket bills say, “You have saved £2 by using this supermarket”, and that money could be put into a savings scheme. People have to be able to say, “This week I cannot or can afford to save.” A regular amount is not really possible in today’s climate.

The Bill has been improved in the Lords and I hope that it can be further improved in this place, to produce a Bill that makes a real difference to people—not just those on a low income, but anyone who receives an income shock, is having problems managing their finances or needs a bit of help budgeting. Financial education in schools is really important. It is important that we teach children how to deal with their finances, but when the washing machine breaks down, speed trumps any form of lessons, interest rates and so on, and that is why the companies say—we have seen the adverts—“I can get the money to you tomorrow.”

Financial Guidance and Claims Bill [ Lords ] (First sitting)

Yvonne Fovargue Excerpts

Committee Debate: 1st sitting: House of Commons
Thursday 1st February 2018 Public Bill Committees

[Yvonne Fovargue (Makerfield) (Lab)]

Has my hon. Friend read Peter Wyman’s recent independent report on the debt advice landscape? He advocates that there should be somebody in charge of the whole debt landscape—almost a debt Tsar. That seems to be a really good idea, to maintain the independence of the debt landscape. Does my hon. Friend agree?

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[Jack Dromey]

Although self-employed people will be able to access the help of the new body for their personal finances, they will not be able to use it for their business finances. We have listened very carefully to the voice of the self-employed—on one hand organisations such as the Federation of Small Businesses, and on the other hand people I have spoken to in my own constituency, including taxi drivers and construction workers who are self-employed and, indeed, an individual who ran a fruit and veg shop in Erdington High Street and got into financial difficulties.

I have seen how self-employed people badly need advice and guidance, and there is all too often an overlap between their personal advice and guidance and that for the business in which they are engaged. That is why we say that evidence shows that, for the self-employed, the line between personal and business finances is usually blurred and can be very difficult to manage, particularly for those just setting out as self-employed people. The number of self-employed people is higher than ever before in our economy, so they need to be able to rely on the new body for advice and guidance when they need it.

Figures released last year suggest that the number of self-employed workers in the United Kingdom rose by 23%—from 3.8 million to 4.7 million—between 2007 and 2017. That represents a shift in the nature of the world of work and the way the British economy is working. Self-employed people now represent about 15% of the workforce, and 91% of businesses say they hire contractors. The majority of self-employed people are sole traders, and there is no legal distinction between them as individuals and as businesses. There were 3.4 million sole traders in 2017. The biggest increase in self-employed people was among women.

Although self-employment is a positive choice for most, there is a real problem with the conscription of some into reluctant self-employment. Either way, the average earnings of the self-employed are significantly lower than those of the employed. The figures vary—I would be the first to acknowledge that—but there has been growth in self-employment in higher-skilled, higher-paying areas, such as advertising, public administration and banking. Although some workers enjoy greater flexibility and control over their working patterns, self-employment can nevertheless have a negative impact on their access to finance.

As self-employment has increased, so has demand for advice about business-related debts. Last year, 36,421 people were helped by the business debt line run by the national charity the Money Advice Trust, which does outstanding work and gave us very good advice and guidance about the Bill. Demand for the debt line has increased from 24,000 in 2016 to 36,421. The Money Advice Trust says, and I think it is right, that it expects the rise in demand to continue.

The amendments would ensure that the SFGB provided self-employed people with information, advice and guidance about their business-related, not just their personal, debt and finances, with a focus on those who are most in need, in line with the body’s wider objectives. The amendments would apply to its debt advice and money guidance functions. As Lord Haskel said in the other place,

“the work of the SFGB should include the self-employed and micro-businesses, particularly at a time when the line between company employment and self-employment is becoming very blurred.”—[Official Report, House of Lords, 5 July 2017; Vol. 783, c. 933.]

Personal and business finances are closely intertwined for many self-employed people. Some 48% of self-employed people use a only personal current account for their business, and a further 17% use both a personal and a business account, according to the Financial Conduct Authority’s “Financial Lives” survey in 2017. The Money Advice Trust report, “The cost of doing business”, which is based on extended interviews with business debt line clients, found that almost seven in 10 of those who had taken out a personal loan were using it to prop up their business. Research by the University of Bristol’s personal finance research centre identified two key areas of overlap between business and personal finances: first, general living expenses, especially for those who live on their business premises; and, secondly, the use of personal credit to manage cash flow where necessary. Given the intertwining of business and personal finances for many self-employed people, if the SFGB does not offer information, advice and guidance on both, it will not be able to provide that growing section of the population with the support it needs.

I very much hope that the Minister will respond constructively to what we are saying and look at what might happen if the Government choose not to amend the Bill. I reserve my right to come back on that after hearing the Minister’s response.

[Yvonne Fovargue]

I want to make a short contribution about how the finances of the self-employed are muddied with their personal finances. I had a meeting recently with Amigo Loans, a guarantor loan provider. It said that an increasing part of its business is loaning to people in a personal capacity, although they know it is for business purposes. Is that a business debt or a personal one? The fact that it does not look at the business plan might make it a personal debt, although I do think it ought to be looking at the business plan. Is it a personal debt or a business debt for the guarantor who guarantees the debt? In a lot of cases, it is fairly unclear where the line lies. To have a firm demarcation line where no business debts are dealt with is probably detrimental.

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[Mhairi Black]

The amendment is pretty straightforward and sensible. It would clarify the important differences between information, guidance and advice, which we know have a major impact on people’s decisions and how reliable they are if things go wrong. It is not often that parliamentarians admit ignorance, but before I became pensions spokesperson, I did not realise that there was any official difference between the three terms. I am a Member of Parliament and I have only recently found that out, so the Committee can imagine what it must be like for the general public. As long as the Government clarify the definitions of the three terms, I will be happy to withdraw the amendment.

[Yvonne Fovargue]

I support the hon. Lady’s request for definition of the terms, although I recognise that it is difficult not to stray into other areas. A further concern is that the information, guidance and advice need to be free and impartial. There are too many pensions providers that spend a lot of money—I heard of one spending £15 million—on ensuring their advice is compliant with all the FCA impartiality rules. As somebody said, if pension providers are spending £15 million on making their advice impartial, they must be expecting some return on their investment. That worries me—that people are gently steered towards a particular product if they go to a particular service.

I believe that some of the comparison websites that people use are not always impartial. If they take money for the top rankings, they are not providing a properly impartial service. People do not understand the differences between those comparison website that have paid-for rankings at the top and those that are completely impartial, based on objective criteria. Guidance on the types of investment can be different when it leads to a product sale, unlike when it is just helping a consumer through their options, completely free of any sales pitch.

[Craig Tracey (North Warwickshire) (Con)]

I declare an interest as chairman of the all-party parliamentary group on insurance and financial services. I welcome the Bill in general, and from my conversations with the insurance industry I know that it is very supportive of the Bill and of the establishment of the single financial guidance body as great step forward to having access to guidance at relevant points in life. Because of the welcome pension freedoms, that guidance has become more essential than ever before.

There is good practice in the industry already—for example, Aviva insurance is running its MOT at 50 scheme, on which the preliminary feedback has been very positive. The results show that getting advice made people far more engaged with their finances and more likely to plan for their retirement, and many went on to seek regulated advice. The crucial point that Aviva made was that by delivering the MOT at 50, people had time to change their plans, think realistically about the future to meet their retirement objectives.

I want the Minister to give clarification on three points. First, what will the Bill provide for consumers? From the APPG’s and my perspective, it should look at providing financial resilience, promoting early intervention to prepare for life events, and raising awareness of the benefits of protection products, which are particularly helpful for the self-employed—things such as income protection, critical illness and life insurance. In my experience as a broker, people generally only took those when it was too late and when they had had a bad experience. If we can help to advise people ahead of incidents, that would be really useful.

Secondly, could we have clarification on the timeline for implementing the SFGB and assurances that transitional agreements will provide certainty of access to guidance for consumers, and certainty for providers in relation to signposting arrangements? Thirdly, will the Minister set out how the new body will set standards to be approved by the FCA? The Bill says that that should happen, but it does not specify how it should be approached or how it intends to set out the strategy. Could the Minister provide some guidance on that? I appreciate that the answer to the third point might be quite detailed and I will be happy if we wants to write to me with the information. I look forward to his response.

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[Guy Opperman]

I will come to the comprehension point in a second, if the hon. Lady will permit. I will deal with all three points.

After the legislation was suitably amended, debated, discussed and agreed with their lordships, it was specifically written into the Bill that the information, guidance and advice should be free and impartial. I take the point that the hon. Member for Makerfield raises, but I hope that she is reassured that that has been specifically written into the Bill, and is addressed there.

On the definition of terms, may I address the points made by the hon. Member for Paisley and Renfrewshire South that go to the fundamentals of her amendment? One of the key recommendations of the financial advice market review—sometimes known as FAMR—was to clarify the regulatory definition of financial advice. The Government consulted on revising the definition of regulated advice in the existing Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, so that regulated advice was based on a personal recommendation. That definition is in line with the EU definition set out in the markets in financial instruments directive 2004, catchily known as MFID. The Government agreed that revision, which came into force in early January 2018. We therefore suggest that introducing a new definition of advice in the Bill is unnecessary and potentially duplicative. It would cut across existing regulatory architecture, not just in respect of what the Bill is trying to do and the clients it covers, but across other aspects of the Treasury and dealings with the Financial Conduct Authority and industry and consumer groups. In addition, using legislation to establish definitions for those terms would not provide the flexibility in the future to adapt the definitions appropriately, if and when that needed to take place.

I also take issue with a number of points regarding the amendment. First, the three organisations that we are merging to form the single body do not seek the definitions that the hon. Member for Paisley and Renfrewshire South is seeking to persuade us of. Those organisations are a pretty good guide to what the Government are doing, because we have consulted at length, asked them what they want us to do, and they most definitely have not said, “Go away and define those individual points.” They want the degree of latitude to continue.

Secondly, the hon. Lady asked the body to do this within three months. To answer my hon. Friend the Member for North Warwickshire on timings, we hope that the body will be created—subject to the good will of the House and Her Majesty signing on the dotted line—between the end of October and the beginning of December. Asking the body to make, within three months of its creation, having merged three organisations, a definition that would probably apply across all financial sectors is, with respect, putting quite a big burden on the body. Also, it is not the appropriate organisation to do that. That should be done by the independent Financial Conduct Authority, suitably engaged in consultation with wider parties. We have done that in relation to advice; that is why we had the FAMR review. To be fair to the FCA, it took two years of long, hard struggle to come up with the specific definition that all parties were content with. I go back to the point that while those particular points are not sought by the individuals, I believe that it is not appropriate to give the definitions.

My hon. Friend the Member for North Warwickshire asked about timings. We will be up and running, with a fair wind, in winter 2018—but beware of Ministers who say when things will happen, and of course winter in parliamentary terms can stretch a long time. The standards by which the single financial guidance body will be judged are set out in clause 10, on which I am delighted to be addressing the Committee this afternoon, so I will not go into detail about the standards now but will ensure I set out a bit of detail in answer to that question when we debate clause 10, so bear with me. He also made a point about resilience and life events, which I will address briefly.

A simple point is made about resilience, as set out in clause 2 through the various objectives described, whether the consumer protection or the strategic function. It is also fundamentally set out in clause 3(9), which mentions

“financial capability of members of the public”.

One may use “resilience” or “capability”, but the words—without getting too much into definitions—are all but interchangeable and, in the circumstances, we believe that those provisions address capability and the points made by my hon. Friend.

Regarding preparation for life events, my hon. Friend is a passionate supporter, as am I, of the concept of the mid-life MOT, which has been pioneered by certain companies, including Aviva. As a Government, in particular the Department for Work and Pensions, we are looking at the idea of people, at different critical points of their life, the middle point in particular, assessing where they are in terms of finances, pensions, guidance and everything. That seems eminently sensible to us, and we encourage all private sector organisations to do it. We are formulating plans.

[Yvonne Fovargue]

But does the Minister agree that it is not only major life events that can cause a problem? In connection with financial resilience, we all know that it might be the broken washing machine that can cause a bump for people who do not have that amount of savings. On financial capability, does the Bill look at addressing the need for people to build up a small pot of savings?

[Guy Opperman]

The answer is yes. Capability is about the ability to deal with life events, whether the traditional ones such as marriage, birth of a child, retirement or the middle of one’s life generally, or—the hon. Lady is dead right—the washing machine or the car breaking down. There is formulated, as I am sure she is aware, things such as the sidecar proposal that is attached to auto-enrolment specifically to provide a savings pot to deal with life events, so that people are not affected by the sudden events involving £100 or £200 and so on. The Department is definitely working on such things, as we will seek to work with the single financial guidance body to ensure that it formulates those strategies. As the BBC puts it, there are other providers, such as Moneybox, Plum or—the name of the third one that I am particularly impressed by—Chip, which allow people to make small savings through day-to-day earnings and usage, giving them a pocket of savings to deal with things. We very much support all such organisations, and I utterly endorse the points made.

Financial Guidance and Claims Bill [Lords]

Yvonne Fovargue Excerpts

3rd reading: House of Commons & Report: 3rd sitting: House of Commons
Tuesday 24th April 2018 Commons Chamber

[Alex Cunningham]

I want to speak briefly to new clause 2. While I am sure, Madam Deputy Speaker, that you have many years to go before you reach your own mid-life point, I am sure you will understand that we could all use a bit of advice at times—even though those of us with six decades or so behind us think it our duty to pass on pearls of wisdom to the younger generation.

There is plenty of talk about young people and their finances—about how they can manage their cash and get on the property ladder, which is of course impossible for many these days. This Bill does something to help young people, and I am pleased about that, but what it fails to do is help those in the mid-life stage—people who may have saved a bit, joined a pension scheme, or bought an ISA or two. More importantly, it does nothing to help those who have done none of those things and simply do not know who or where to turn to when planning their later life.

Although some excellent initiatives have passed through this House, such as Labour’s policy of auto-enrolment into workplace pensions, there have been a number of failures, not least around the issue of ’50s-born women and their state pension age, which was extended by the Tory-Lib Dem coalition by several years, condemning many such people to poverty when they should have been enjoying retirement. We could have hoped that the experience of thousands of women left facing difficulty and uncertainty would act as a salutary lesson to everyone else that they cannot really depend on Governments to deliver the security they need in retirement, but need to find ways to make provision for themselves.

People are now looking at their expected pension provision, if they have any, and then panicking about how they are going to afford to live when they retire, or are faced with the reality that they will have to work beyond retirement age in order to make ends meet. We also have people who have lived their lives just getting by—who have never been able to buy their own home and now do not know how they will afford their rent once they retire. Uncertainty is very much the name of the game in the 21st century, so we have a responsibility in Parliament to make provision to ensure that everyone, whether they can afford it or not, is able to work out how they will live when they are no longer receiving a wage. This new clause to provide targeted information to people from the age of 50 delivers that.

We all know that people can now expect to have several jobs throughout their career, and redundancy, zero-hours contracts and insecure work are clouds hanging over millions of people every day. Some people in their 50s find that they need to retrain for another role, but many do not know where to begin or where to get to the facts. This body, backed by the right promotional campaigns, including multimedia, could be a lifeline for those who ignore their money problems. I am, however, concerned about the capacity of the new body. We need to guarantee that it can expand if we are to reach many more people with guidance. I am yet to be convinced that that capacity will be there. I hope that the Minister will say something about how it can expand. I also hope that he can extend its services to provide the mid-life advice that people need.

[Yvonne Fovargue (Makerfield) (Lab)]

I, too, want to support my hon. Friends the Members for Walthamstow (Stella Creasy) and for Harrow West (Gareth Thomas). I hope that the FCA will look speedily at the total cap on the rent-to-own sector, with its inflated prices for goods and roll-up charges.

I am pleased that the Bill aims to ensure that members of the public can access good-quality, free-to-client impartial financial guidance, pensions advice and debt advice. Clauses 10 and 11, which relate to my amendment 42, require the single financial guidance body to set and enforce standards across the debt advice partners it commissions. I think that everyone agrees that the body will have to have regard to standards of practice for the organisations it commissions, but the respective roles of the single financial guidance body and the FCA should not create uncertainty. There may have to be additional requirements for organisations that it commissions.

However, an independent report to the Debt Advice Steering Group run by the Money Advice Service says that the quality assurance process for the larger debt advice charities should be authorised by the FCA. The concern is that any such new and additional requirements from the single financial guidance body should not replicate the requirements faced by the debt advice organisations from their regulator, the FCA. Having had a contract from the Legal Aid Board where we had three auditors in at one time, I was tempted just to throw the files into the middle of the room and say “Fight over them.” The auditing ought to be in the same capacity, and it should be done under one audit that covers all if there are the same requirements.

The body’s standard-setting powers also need to be matched with principles of good regulation, and conditions ought to be proportionate to the benefits they will bring. Amendment 42 would make that plain. Ensuring that the new body’s standard-setting powers have regard to proportionality would smooth its functioning, guarantee assurance and stop the uncertainty as to whether the FCA or the single financial guidance body has primacy.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

I want to speak to amendments 8 and 9, which, unlike new clause 4, would lead to an outright ban on cold calling by claims management companies.

Claims management companies make and send around 51 million personal injury-related calls and texts each year. Such calls are not only a nuisance; they exploit vulnerable people. It is worth reiterating that solicitors are already banned from cold calling in personal injury claims, but the fact that claims management companies are not risks bringing the sector into disrepute. Cold calling can generate the false perception that obtaining compensation is easy, even where there is no injury. It can put pressure on people to pursue unmeritorious or, at the worst, fraudulent claims, which they otherwise may not do. It may never have been someone’s intention to make a claim, but if they receive a text promising them thousands of pounds, it might seem very tempting.

There is an important context. The Government are proposing to reform compensation rules for whiplash claims and to increase the small claims limit in road traffic accidents from £1,000 to £5,000, and in public liability and employers’ liability claims from £1,000 to £2,000. The Government say that that is to cut down on fraudulent claims and to bring down insurance premiums. However, many, including myself, are concerned that that will have a significant impact on access to justice, with people not being able to access proper legal advice in such claims.

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[George Freeman (Mid Norfolk) (Con)]

Given the shortness of time, I will be brief. I thank the Minister and congratulate him on providing the House with what we were looking for this afternoon. I congratulate the hon. Member for Liverpool, Wavertree (Luciana Berger), my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), the right hon. Member for North Norfolk (Norman Lamb), the Breathing Space campaign and the 80-odd colleagues on both sides of the House who have supported the proposal.

I thank the Minister and the Government for signalling what many people in the House and across the country hugely welcome: an appetite for cross-party working in pursuit of looking after the most vulnerable in society, in the spirit of the Prime Minister’s mission when she arrived in No. 10 two years ago. This will send a signal that we are serious.

Secondly, I echo the comments made by my neighbour, the right hon. Member for North Norfolk (Norman Lamb), about the importance of understanding the vicious cycle of mental health and debt, and the way in which the two are so often implicated here. Recent figures from ComRes have shown that 56% of people in work say that payday struggles are their biggest anxiety. Often that anxiety can lead to further complications in terms of depression, which can lead to mental health problems, which in turn can undermine their ability to earn and work. That often leads into a cycle that makes both the indebtedness and the mental health suffering worse, as I know from my own experience. Sixty years ago, my father won the Grand National and 10 years later he suffered a life collapse from a combination of indebtedness, bankruptcy, mental health issues and head injuries, which in those days were not well treated. It is a sign of how far we have come as a society and as a politics that we now talk about these issues so much more openly and we offer so much more help.

I shall close with my third point, which relates to the importance of that taboo. So many people in our society still suffer in silence from debt, which knows no boundaries and is no respecter of class, political affiliation or geography. People who may appear at ease and prosperous—and often those who appear most that way—are struggling in misery behind the scenes and compounding that misery through their inability to feel confident enough to talk about it. That is why, along with the co-chair of the all-party group on inclusive growth, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), we are working on a small campaign this summer with StepChange, the Money Advice Service, the Financial Conduct Authority and Martin Lewis called “Share not Shame” to encourage people to talk more openly about their indebtedness issues and to seek the help that is available. Many people in this country are paying far too much for debt that could be provided at a minimum—at a fraction of the price—and their debts could be rescheduled in a way that takes the pressure and shame from them. I welcome warmly the undertaking the Minister has given today and congratulate those Members who have led the campaign on this, which will signal across the country that this Parliament is taking their interests very seriously.

[Yvonne Fovargue]

I rise to speak to my amendment 30, which would improve the timeframe for the breathing space, ensuring its introduction by the end of 2019. That would provide greater certainty, because the current timeframe centres on the establishment of the SFGB, which is potentially moveable. I have proposed a realistic target, allowing sufficient time for the necessary preparation work. I am assured of that by the debt advice providers themselves; they say it gives enough time to plan and develop the new systems to deliver the new protections to all.

Let us not forget that debt often pushes people into a mental health crisis and that debt and depression necessitate people visiting the doctors’ surgery. They are suffering depression, but it is not that; it is the debts that are depressing them. The breathing space and statutory debt repayment plans, properly set up, will give people time and space to get debt advice, stabilise their finances through periods of temporary difficulty and put in place a long-term sustainable solution to their debts. That is not just of benefit to the individual; it benefits the creditors as well, because they know they will be getting their money back, in a fair way, over a fair period of time.

I hope that the Minister will also confirm some details of how the breathing space scheme will work. As I have said on a number of occasions, it is essential that the length of time involved is sufficient to ensure that people are not put back into the harmful uncertainty of unmanageable debt before they have that long-term plan in place. Six weeks has been mentioned, and such a period may help some people, but I have said many times that three months is probably more realistic. I have mentioned how long it takes to get people to come in and deal with the debts, with the need to open carrier bags full of envelopes that people have not had the courage to open. If we are going to start with six weeks, provision must be made for extensions to be made to that; it cannot just finish at six weeks, as it often takes longer than that to get an appointment.

I would like to see this scheme cover all relevant debts, including benefit debts, council tax debts and debts owed to central or local government. If creditors are excluded, they will be able to put the unhelpful pressure on the debtors, which will reduce the scheme’s viability and effectiveness. This has to stop creditors across the board making unaffordable repayment demands. For example, claimants on universal credit can have 40% of their benefit withheld to pay off third-party creditors, with another 40% going on paying back benefit advances—that is 80% of the money. That leaves them with 20% of what is considered the minimum amount required to live on, and that is simply unaffordable.

There is widespread unfair pressure from Government creditors. As StepChange says, bailiffs are often the first port of call rather than a last resort. Clients rate the DWP, HMRC and councils far worse than other creditors—far worse than payday lenders—for treating them unfairly. The Government should adhere to best practice, and I hope that the Minister will agree that it is in all our interests to ensure that no vulnerable people are put into a position where they are unable to pay off their debts.

[Johnny Mercer (Plymouth, Moor View) (Con)]

I rise to speak in support of amendment 5, which is in my name and those of the hon. Members for Liverpool, Wavertree (Luciana Berger), and for North Norfolk (Norman Lamb), as well as many others across the House.

We in this place often talk a very good game when it comes to mental health, and serious progress has been made in taking the agenda forward over the last few years thanks to colleagues from across the House. When it comes to parity of physical and mental health, however, small details in policy matter. The amendment concerns one such detail, and I am delighted by what the Minister has said today about bringing that into reality for some of our most vulnerable constituents. It was a manifesto commitment of the Government to introduce a breathing space scheme, whereby people who suffer from problem debt are given a fixed period without fees, charges, interest or collection. The consultation is out at the moment, and I support the proposal very much, but there is a gap in provision for those who suffer from mental health crises—those who are too unwell either to manage their finances alone or seek debt advice, and so would not be able to access this scheme.

As we have heard, last year that situation affected up to 23,000 of our most vulnerable constituents, who were hospitalised for poor mental health while struggling with debt. That does not account for those who were in a similar position while receiving mental health crisis support in the community. The link between debt and poor mental health is indisputable; it is a marriage made in hell. I pay tribute to the work of Martin Lewis in bringing together the Money and Mental Health Policy Institute, which has shone a torch on the relationship between debt and mental health. That relationship is often hidden away in some of the darker recesses of our communities, but it makes some of our most vulnerable constituents’ lives hell.

Tens of thousands of people in this country are trapped in a spiral of escalating debts and worsening mental health. Some receive court summons while they are in hospital. I know somebody who faced demands on their doorstep the day they were released following their recovery from an illness. Some people have missed bill payments while hospitalised for mental health conditions, and escalating fees and charges have led some to attempt suicide directly after contact from bailiffs.

The ask of this amendment is very clear: for the Minister to look at extending the current breathing space scheme to apply to anyone who accesses psychiatric in-patient care. We must commit ourselves ever harder to parity of esteem, as I have said. For those who have a short period of acute mental illness—who suffer panic attacks and cannot open the post, call the bank or even think coherently—going to a debt counsellor to call a halt to things is just impossible. The commitment that we seek today, and that we have got from the Minister, is important because it means that people can look to those in NHS crisis teams for advice and space in the breathing space scheme.

I thank the Minister for his willingness to listen to our concerns. The campaign has been a good one. It has involved all Members of this House and shown what can happen when those from all parts of the House work together. I come back to what I said at the beginning. We often talk a very good game—I was delighted that parity of mental health and physical health was made a manifesto commitment in 2015—but sometimes big words have to be matched by calibrated and careful actions. This is one such area, and I am delighted that the Minister has decided that he is going to work on it. I look forward to working with him and the policy institute to make that a reality for tens of thousands of people up and down the country.