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

Yvonne Fovargue Excerpts

Tuesday 6th February 2018 Public Bill Committees

Brought up, and read the First time.

[Yvonne Fovargue (Makerfield) (Lab)]

I beg to move, That the clause be read a Second time.

This measure is probing and I will not press it to a vote. It was prompted by LawWorks, the operating name of the Solicitors Pro Bono Group—I know that the Minister is a great supporter of pro bono. The group is an independent charity that helps to bring together lawyers who are prepared to offer their time free of charge to individuals and community groups in need of legal advice and support.

The purpose of the new clause is not to deregulate the whole market, but to relax the prohibition that applies to solicitors working in pro bono legal advice clinics from providing advice on consumer credit matters. The prohibition arose as a result of what LawWorks believes was an unintended consequence of secondary legislation under the Financial Services and Markets Act 2000.

By way of background, in 2014 responsibility for regulating consumer credit and consumer credit advice in the UK was transferred from the Office of Fair Trading to the FCA. As part of the regulatory transfer, the group licensing regime was abolished and replaced by the individual authorisation and permission regime for credit-related regulated activities.

The regulatory transfer has not affected the not-for-profit organisations such as local citizens advice, which operate under an OFT group licence, because it could continue under the grandfathering provision. The Law Society’s group licence, however, could not transfer under that provision, because the Law Society is not a not-for-profit organisation. Although LawWorks and the clinics in its network are not-for-profit organisations, they have not been able to rely on the grandfathering provision because they did not have their own group licence before 1 April 2014. As a consequence, the solicitors and firms who volunteer at clinics are at risk of committing a criminal offence by breaching the general prohibition in the FSMA when providing debt and consumer credit advice services.

The new clause would simply make a legislative change to the FSMA to enable the services to be provided without the need for FCA authorisation in a discreet range of services. I certainly do not want an unregulated market, but I want pro bono solicitors to be able to offer the advice they are trained to give. It complements one of the Bill’s main aims, which is to facilitate a free and impartial money guidance service to the public.

[Guy Opperman]

It is a delight to respond to a very important and legitimate point. I should make a number of declarations at the outset: I know LawWorks very well, I set up a free representation unit and a pro bono unit, and two Labour Peers have given me awards for my pro bono works in the past. Lord Goldsmith and Baroness Scotland were both most ill advised in giving me the pro bono lawyer of the year and then a pro bono hero award for exactly this sort of work, although not in respect of debt advice. I have great sympathy with the hon. Lady’s point. I will address it briefly now but am happy to discuss it in more detail.

There are a number of easy arguments to make. Most importantly, this is a matter that the single financial guidance body can already address. Clause 3(5), (9) and (10) give capacity for the single financial guidance body to review the provision of those types of arrangements, and to make recommendations once it has come to a conclusion on whether it is an appropriate way forward.

I accept and acknowledge that the FCA transfer has created some anomalies, but there is a reason why. The hon. Lady will fully understand that the Government are keen to ensure that consumers in problem debt have access to high-quality, regulated debt advice. The new body will, to a great degree, go a long way to ensure that that specific goal is met, but there are a couple of extra points I will make.

First, it is important to note that, during the transfer of debt advice regulation to the FCA, the not-for-profit debt advice providers widely supported the FCA regulation of their activity because they felt it was important to ensure that all debt advice was of a high quality. Secondly, with great respect to LawWorks and the point made, I do not believe the assertion made is appropriate. Of course, individual organisations can apply to be regulated if they so choose, or to get a group regulation under FCA rules, but I think it appropriate that we consider it in more detail and invite the SFGB to go away and decide whether it is something it would recommend as part of the statutory remit we have set up under clause 3. In those circumstances, I invite the hon. Lady not to pursue her new clause.

[Yvonne Fovargue]

I thank the Minister for his reply and I am pleased that he has taken on board the principle. Certainly we do not want to deregulate the Debt Advice Network. I am in favour of it being a regulated body so that we can have high-quality advice. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

[Guy Opperman]

Am I correct that we have now finished all particular clauses that need to be decided thus far?