Community Debt Advice Services

Debate between Yvonne Fovargue and John Glen

Wednesday 1st December 2021 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

Thank you for the opportunity to respond, Ms Bardell. It is a pleasure to serve under your chairmanship and to speak in the debate on behalf of the Government.

I have listened intently and carefully to all seven Back-Bench speeches, which have revealed considerable understanding of the complexity of the service delivery in constituencies across this country. There has also been significant commentary around the context in which our constituents find themselves at this incredibly difficult time. I will endeavour to answer the specific concerns raised about the recommissioning exercise by the Money and Pensions Service in a few moments. I congratulate the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) on the constructive tone and content of her speech, and on securing the debate.

I will begin with a deliberately unambiguous statement: the Government are committed to supporting the financial wellbeing of the most vulnerable in society, and to tackling problem debt. As reflected in the contributions to the debate, hon. Members will be well aware of the scale and breadth of the package that we put in place to protect jobs and livelihoods during the pandemic. It was one of the most comprehensive support packages in the world, but I recognise that it was never going to be comprehensive for every single need.

We recognise that individuals in problem debt require extra support to get their finances back on track, especially during this challenging and, to a degree, uncertain time. For that reason, we agreed to provide additional funding to the Money and Pensions Service for debt advice provision in England in 2020-21 and this financial year, on top of our wider coronavirus support package.

Several speeches referred to the difficulties in predicting demand and its distribution; indeed, MaPS acknowledged that, in terms of what it ended up needing for the 2020-21 financial year. That will always be a judgment call that it has to make very carefully, but the additional funding enabled the recruitment of more than 500 new debt advisers to provide additional debt advice capacity to meet the anticipated demand arising from the pandemic. Part of that additional funding was also allocated to providers to cover lost income from a key voluntary funding stream known as “fair share”.

I will say a little more about debt advice in a moment, but first I will highlight some of the things that the Government have done to help people in financial difficulty, because some speeches referred to that wider context. In May 2021, as I think the right hon. Member for Wolverhampton South East (Mr McFadden) acknowledged, we launched the breathing space scheme, with cross-party support, where lenders agree to hold off with their fees and payment requests for 60 days. We have championed that scheme for many years and I am proud to see it up and running.

We will use similar principles of providing respite from bills and demands in the introduction of a statutory debt repayment plan, which is currently under development. Under that new plan, which will essentially give another mechanism for people to use when they are struggling with debt, people will enter formal agreements with creditors to repay their debts over a more manageable timeframe. We are obviously working very carefully with the sector to get that absolutely right.

As well as helping individuals to tackle problem debt, we are ensuring that they have access to fair and affordable credit. In the Budget, we introduced plans to provide £3.8 million for a pilot no-interest loans scheme, which Fair4All Finance is working with partners to design and deliver. It is my ambition, and that of the Government, that those loans will support people who are unable to access or afford existing forms of credit, and prevent them from falling into problem debt. During the debate, the uptick in buy now, pay later was mentioned. As I think we discussed in this Chamber last Tuesday afternoon, that is a priority for us as well, and I was grateful for the contributions from Members who were present.

The Treasury is working closely with the regulators and other Government Departments to help and protect people in financial difficulty. The Financial Conduct Authority regulates debt advisers, and recently published its consultation on debt packager firms. We believe that the FCA’s proposals will put a stop to bad practices in the sector and help to prevent consumer harm. We are also engaging closely with the Insolvency Service, which this summer raised the monetary eligibility limits for debt relief orders. Those changes will enable more people in financial difficulties to access a DRO and get a fresh start.

Let me turn to the specifics of MaPS’ debt advice commissioning exercise, which has occupied the lion’s share of time this morning. That exercise is an important step towards creating a better and more resilient debt advice sector. At the core of the contributions was a concern around the redistribution of face-to-face and online and other modes of delivery, and the outcome of the commissioning process. MaPS’ current commissioning model dates back many years, and some of its current grant agreements even predate its predecessor body, the Money Advice Service.

I listened carefully to the contributions on the complexity of the needs of individual constituents, and I respect the experience of the hon. Members for Kingston upon Hull East (Karl Turner) and for Makerfield (Yvonne Fovargue), who have personal professional expertise in this area. It is important that we aim to achieve an outcome from the commissioning exercise that gives MaPS a better opportunity to manage performance and drive improvement, innovation and efficiency—improving the service that customers are offered and offering greater value for money, but not failing to recognise the complexity of the needs of those populations. That is in line with the Government’s wider approach on the funding that they give to charities, 80% of which is now on a contract basis.

The hon. Member for Kingston upon Hull West and Hessle spoke of a number of concerns raised by the debt adviser community, individually, in representations to constituents and collectively through this process. A transition, such as the one proposed by MaPS, will require some changes and for the sector to adapt to them. The question is about to the pace and scale of those changes, which is the discussion that MaPS needs to resolve in the coming weeks. I am unable to comment on the specifics of the commissioning exercise. I do not run that, nor do my officials. There is a degree of commercial sensitivity around it.

This morning’s debate has put some detail on the nature of the concerns. I commit to ensuring that those concerns are represented fully to the leadership of MaPS as it undertakes this evaluation and moderation of the bids received. Once that is completed, MaPS will have a greater understanding of what the changes will mean to debt advice provision in England, including the proportion that will be delivered face to face. I can say that the Government have given MaPS a statutory duty to consider the needs of the most vulnerable.

Colleagues have raised issues of the unmet, or even undiagnosed, needs that come out of conversations, as well as case complexity and the concerns raised by the right hon. Member for Wolverhampton South East about literacy and privacy. All funded services must be able to handle those complex cases, and MaPS needs to demonstrate that the commissioning exercise will achieve that, irrespective of the channel the cases come through.

[Yvonne Fovargue]

Although we are discussing the MaPS contract, we have also heard a lot about clients’ mental health problems. Has the Minister had any discussions with other agencies—for example, clinical commissioning groups in the area of health—about commissioning services, such as Financial Shield, which help those in debt and with other problems? That will save the health service money as well.

Online Scams

Debate between Yvonne Fovargue and John Glen

Tuesday 10th November 2020 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

May I say what a pleasure it is to serve under your chairmanship, Mr Dowd? I thank the hon. Member for Makerfield (Yvonne Fovargue) for securing a debate on this important topic. I pay tribute to her general competence and knowledge on consumer issues. I have engaged with her a number of times as a Minister, and I always appreciate the constructive way she approaches this topic. She has demonstrated again this afternoon her comprehensive awareness of the complexity of this subject, and how it impacts so many of our constituents.

I know very well how this issue matters to many colleagues across the House, because it has impacted so many across our constituencies. As a constituency MP, I have encountered the financial and mental impact, and the anguish it causes individuals in my surgery.

I assure Members that the Government are committed to tackling this complex problem. I will set out the context. There have been rapid changes to modern payments, which bring great benefits and opportunities to many, but with new opportunities come new risks, such as the type of scams the hon. Lady set out. More people and businesses are buying and selling online. People are using a range of innovative ways to make payments via card, mobile and electronic wallets. In 2019, over two-thirds of UK adults used online banking, half used mobile banking, and for the first time cards accounted for more than half of UK payments. Those new technologies and products have helped to make payments faster and cheaper, and provided exciting opportunities for UK businesses and consumers.

Alongside those innovations, as the hon. Lady rightly said, criminals are becoming increasingly devious and sophisticated, and are ruthlessly exploiting these new technologies and the digitisation of commerce to perpetrate scams. The truth is that there is no silver bullet. I wish there was. Success in the matter depends on quite sophisticated collaboration between Government, the regulators, banks and online platforms, and between customers and the services they use. The Government are committed to playing their part to facilitate that better collaboration.

Turning to the current situation and what is already being done, authorised push payment scams—APP scams—have become a major problem in recent years. Fraudsters use sophisticated techniques to trick people, often, as the hon. Lady said, by forming phony relationships and defrauding people into authorising payments to criminal-controlled accounts. According to UK Finance, £456 million was lost to these scams in 2019, up from £354 million the year before.

Last week, I met with the managing director of the Payment Systems Regulator and raised concerns like those we have heard today. We agreed that more needs to be done to ensure victims are protected. To that end, the Payment Systems Regulator and industry are working together to improve the level of protection provided to consumers through the existing voluntary code, known as the contingent reimbursement model code, which the hon. Lady referenced.

Banks that have signed up to that code have agreed to reimburse victims of APP scams, so long as they took a reasonable level of care when making the relevant payment. As the hon. Lady will know, the code has been operating since May 2019, and its effectiveness is currently being reviewed by the lending standards board, the body responsible for governing it. I look forward to the conclusions of that review. The hon. Lady cited statistics, which I recognise require thorough examination.

When it comes to fraud, prevention is just as important as any cure. That is why the authorities are taking steps to ensure that fewer people fall foul of the scams in the first place, notwithstanding the sophisticated nature of the interactions that lead to them. At the request of the Payment Systems Regulator, the six biggest UK banking groups have introduced a process known as confirmation of payee. Under that process, the bank account and sort code numbers are checked against account names, to ensure that payments are going to the intended recipients. It is early days, but we are confident that this innovation is an important step forward in preventing scams from succeeding in the first place.

The challenge is that for a number of those measures—we are probably all familiar with them from doing payments ourselves—it comes down to where culpability lies. The hon. Lady made observations about the sophisticated relationship and the conditioning that has sometimes taken place. That is what we are dealing with and what we have to get to grips with.

The financial services sector is just one part of the equation in combatting fraud. Other industries, including online platforms, which have been mentioned, have a role to play. The National Cyber Security Centre has been leading the way in ensuring that online scams are taken down as quickly as possible, and this year it launched a new suspicious email reporting service, making it easier for the public to highlight suspicious emails and websites. The service has already led to more than 3.6 million reports and more than 18,000 scams being removed, but I recognise that more needs to be done.

The Financial Conduct Authority’s ScamSmart website, which is not limited to online scams, also aims to help consumers protect themselves against investment scams. It does that by allowing users to search a warning list to check an investment opportunity and report scams or unauthorised firms. Anybody who falls victim to such scams should contact Action Fraud UK to help us catch the criminals. As the hon. Member for Upper Bann (Carla Lockhart) mentioned in her contribution, this is a universal problem, and I recognise her anxiety about the sufficiency of the measures. As I say, I am happy to continue the discussion about what more can be done.

The private sector has its own responsibility to protect customers online. We have been working with online platforms and industry to take down fraudulent materials and websites. The specialist Dedicated Card and Payment Crime Unit is a great example of that partnership at work: it is a proactive police unit and involves UK Finance, the City of London police, the Metropolitan police and the Home Office. It continues to develop new partnerships with social media companies to take down accounts being used for various fraudulent ends and to stop the recruitment of people as money mules.

As well as working to prevent scams, we need to look after those who fall victim to them. We need to consider the emotional, as well as financial, harm that victims experience. That is why we are working with national and local policing, including police and crime commissioners, to support the victims of these terrible crimes. Even where it is not possible to investigate a case further, the Action Fraud economic crime victim care unit supports victims by helping them to recover and better protect themselves in future. What about the next steps? A lot of good work is being done, but we cannot rest on our laurels. This is a sophisticated problem: just as the wider banking, online and commercial landscapes continue to evolve, so the methods used by criminals to defraud customers evolve. In June 2019, the Treasury announced a review of the payments landscape, and we recently held a call for evidence as the first stage. That call for evidence reflected on the success of the Faster Payments Service as a 24/7 real-time payments system, but it also noted that Faster Payments currently lacks scheme rules to resolve disputes and assign liability when payments go wrong, including—crucially—in the case of APP scams. The Government have concluded that a set of comprehensive rules in the Faster Payments Service could make a real difference to tackling that problem. We have sought views on the issue and will outline our next steps in due course.

[Yvonne Fovargue]

Will the Minister also look into the fact that many criminals, particularly in romance-type frauds, have moved on to asking for Amazon vouchers? What can be done in cases such as that of my constituent, who bought thousands of pounds-worth of Amazon vouchers and sent them abroad?

[John Glen]

I thank the hon. Lady for her intervention. Although I have not personally experienced that, through either my constituency or ministerial work, she makes a sensible point about the evolving nature of those frauds. In that particular example, it would be reasonable to expect the platform to observe the obvious unusual nature of such a purchase. This is not territory with which I am directly familiar, but I will take it back to my colleagues in Government, including at the Department for Digital, Culture, Media and Sport.

More of us are transacting online than ever before, opting for the speed and convenience of new forms of banking and payments, but sadly fraudsters are taking advantage and developing ever more sophisticated ways of scamming people. We cannot row back on digital innovation and, given the immense benefits, nor should we, but it is crucial that people have confidence in how they transact online.