Pat McFadden
MP for Wolverhampton South East · Labour · United Kingdom
“In his review Alan Milburn considered that issue and said that, “the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years.” As I said earlier, 400,000 more people are in work this year than last year, and the number of young people in employment is up since the election.”
“Since our last DWP questions, both Alan Milburn and the Pensions Commission have published their respective interim reports on young people and on the current state of saving for retirement. I look forward to receiving their final reports later in the year.”
“As Alan Milburn pointed out in his recent report, the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years. There are 400,000 more people in work than last year. The number of young people in employment is up by 74,000 since the election.”
“I thank the right hon. Gentleman and send him commiserations for whatever has left him reliant on his crutches today. I am happy to congratulate the businesses he mentioned in his constituency. He raises a serious point: it is important not only to come up with the right policy, but to make it simple for businesses to use.”
“My hon. Friend is right, and I thank Cardiff football club for being a partner. We are supporting nearly 1 million young people and creating up to half a million opportunities for jobs and training.”
“We are making strong progress on expanding youth hubs, with around 130 already in operation across Great Britain. In March, I announced the locations that we want to open in this year, and I have just announced a further 180 locations for the following two years.”
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“Thank you, Mr Speaker. It takes some doing to come up with an inheritance tax aimed at people in the lowest-value properties, but that is exactly what the Chancellor and the Conservatives have done in the way they have designed the social care cap. Even the original author of the policy, Sir Andrew Dilnot, has said that the changes that the Government have made mean that “the less well off will not gain any benefit from the cap.” When it comes to tax, we should look at what the Government do, not what they say or the newspapers they brief. Why is the Chancellor imposing a tax rise on almost everyone to pay for a policy that will hurt those with the lowest-value properties in the country?”
“Families are heading into the winter facing a cost of living crisis with rising prices and the Chancellor’s tax rises on the way. Last week, the Bank of England produced even lower growth forecasts than the Office for Budget Responsibility did at the time of the Budget, and now the Bank is forecasting that inflation will rise above 5% next year. Why does the Chancellor think that the Conservatives have produced such low levels of economic growth over the past 10 years? Has this lost decade of low growth not led directly to the cost of living crisis, the high taxes and the inequality that people are facing today?”
“Can the Minister assure the House that the Government are telling the financial regulators that crypto exchanges that operate in the UK should be regulated in the UK? Is that the Government’s position? This is an important debate, and it has shone a light on the inadequate efforts being made to protect the country from being seen as an easy place to store or to launder illicit finance. Despite the persistence of the problem and all the words said about how serious it is, the Government have dragged their feet on implementing measures that could command cross-party support. This is too serious an issue for that approach to continue because, as I have said, it is not just a matter of money; it is a matter of national security. It should be treated as such, and that is certainly the approach the Opposition take to the issue.”
“That has not been discussed much this afternoon, but it is hugely important. Their growth poses a genuine challenge to regulators and central banks right around the world. Where do the Government stand on the regulation of cryptocurrencies? Is it the case that crypto exchanges are being encouraged to base themselves outside the country so that we do not have to face up to these regulatory questions and responsibilities? Washing our hands of this issue is not good enough if the result is that those exchanges are based abroad and are beyond our reach in regulatory terms, without its making any difference to their ability to operate in the UK market. We have to be alive to the dangers of fraud and money laundering through new methods and innovations, and regulation has to keep pace with these market innovations.”
“Having hung the financial sector out to dry when negotiating the Brexit deal, the Treasury now dangles the consolation prize of deregulation in front of it—the “Crackerjack” pencil for cutting off market access from the European Union—but at what price? Regulation was changed in the wake of the global financial crisis right across the world to protect the public in different countries, and the consequence of the Chancellor’s post-Brexit search for a consolation prize for deregulation should not be to put the public at greater risk. What kind of signal is it to send around the world to say, “Come to Britain because we want to make the referee weaker”? That is not even a signal the financial sector itself wants. New fields are emerging. Cryptocurrencies have grown hugely in recent years.”
“Of course, any new corporate liability laws have to be carefully thought through, but the law should not act as an incentive for chief executives and senior executives in companies to claim ignorance about what is happening in their own organisations. We saw that time after time during the LIBOR scandal when these titans of the finance industry testified one by one that they had no idea what their traders were up to. The question facing the Government is: if corporate responsibility is right for tax, why should it not be right for fraud? Underlying these specific points is a broader issue that should focus our attention. A number of times the Chancellor has said that he wants to put competitiveness at the heart of post-Brexit financial regulation.”
“For example, who is there left in the Business Department who can still take a decision on the Aquind pipeline? How many Ministers have had to recuse themselves either because they have been funded or because they have already pronounced on the impending decision? The third element called for today is greater corporate responsibility when it comes to money laundering and fraud. This already exists for tax evasion, for example. A company could not get away with saying, “Well, we were looking the other way—we didn’t know” when it comes to tax evasion. This was debated during the passage of the Financial Services Act 2021, which went through the House this time last year.”
“Where is the Government’s response to the measures advocated in that? Here there is not even a pretence of action. In fact, the report said, “If you’re determined to look in the opposite direction, then perhaps it’s not a surprise that you haven’t found anything.” The Government keep looking away in the hope that this issue will go away, but it will not. Two weeks ago, the shadow Security Minister, my hon. Friend the Member for St Helens North (Conor McGinn), wrote to his opposite number asking what checks there had been on the almost £2 million of funds from Russian donors to the Conservative party. Does the Conservative party ask any questions at all when receiving this money? Why do Conservative Members think that their party has been such an attractive destination for this money, and what is it doing to Government policy?”
“Plans for reform have been announced, which the Minister will no doubt go through in a few minutes, but they have not been implemented. The aim should be clear: to ensure that Companies House is a guardian of propriety, rather than simply a library of data where there are no real checks on the quality of that data. No legitimate business owner has anything to fear from that kind of reform, but the people registering thousands of companies for the purpose of obscuring real ownership do. I urge the Minister not only to say what is planned for Companies House but to ensure that it is actually implemented. The sponsors of today’s debate rightly put Companies House reform at the heart of the fight against money laundering and fraud. What of the Intelligence and Security Committee’s report on Russia?”
“The legislation could play an important role in revealing the true nature of asset ownership, particularly the expensive London properties beloved of those who want to store their wealth here. Why will the Government not bring forward the Bill? Why does it keep being put on the back burner? Who in Government keeps saying no to it? Shell companies are at the heart of mechanisms to hide the true nature of wealth—or perhaps more accurately, layer on layer of shell companies whose sole purpose is obfuscation. We have heard some figures about the registration of companies, including that there are 4,000 owners under two years old and that five beneficial owners control more than 6,000 companies. Companies House is a registrar that lacks the powers to do any serious policing or regulating of who registers companies.”
“The measures advocated in this debate command strong cross-party support, so why are the Government not making more use of that support? Where is the urgency that hon. Members have called for? Let us consider some of the individual measures that have been discussed. The Registration of Overseas Entities Bill has been on the stocks for years, but it sits in the sidings, not moving. We are approaching the fourth anniversary of when it was first promised, and it is more urgently needed now than then, yet when asked about the timescale, Ministers still wheel out the time-honoured bromide of “when parliamentary time allows”. They have had four years of parliamentary time, which is more or less a whole Parliament.”
“The fight against money laundering and fraud is too important to be let down again by the belief that there is one rule for them and another for everyone else. It is not an easy battle, because we are dealing with very rich people who will employ the most expensive lawyers in town to intimidate those who criticise them and try to silence them though financial exhaustion. We should pay tribute to the brave investigative journalists who have written about such things to expose what is happening, knowing that they will be aggressively pursued by legal actions designed, at best, to silence them and, at worst, to bankrupt them. But however rich the people involved are, we in this House can still act. We can decide not to sit back and let it happen.”
“It is an issue not just of financial probity and tax revenue—though it is certainly that—but of national security and should be treated as such. If we are a welcome home for the proceeds of looting and kleptocracy, what does that say about the rule of law or our standing in the world? The Prime Minister’s recent performance on the issue of standards in this place suggests that he has scant regard for rules and responsibilities, but we already knew that. We know what he thought of the rules last Christmas when he told the rest of the country that they could not gather, as there are now reports of one Christmas party, maybe more, while the rest of the country was trying to obey the rules.”
“There is a gaping hole in that Bill, and the first thing I want to put to the Minister is to accept the strength of feeling across the House that it has to be strengthened. With the release of caches of documents, such as the Pandora papers and their predecessors, the UK and its overseas territories are far too often mentioned as a place where illicit funds can find a home. We are about to go into a winter in which people will face not only rising prices but rising taxes, but time after time, we see reports that billions of pounds of illicit funding are washing through our country. The contrast between the obligations of those who struggle to make ends meet and those who see our property laws and institutions as vehicles for laundering money could not be more stark.”
“It is an opportunity, because how we regulate that can set an example around the world, but it is also a responsibility, because if our standards are too lax, and we allow the UK to be an easy home for illicit finance, that also sends a signal of a very different kind around the world. As my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Work and Pensions Committee, said, every day our constituents are assailed by fake texts, emails and scams trying to con them out of their own money. It is extremely difficult for our constituents to know what is genuine and what is not when receiving such communications. That is why it is essential that we act and use the opportunity of the online harms Bill to crack down properly on this kind of consumer fraud. At the moment, that is not the plan.”
“I am very grateful to the hon. Member for Thirsk and Malton (Kevin Hollinrake), my right hon. Friend the Member for Barking (Dame Margaret Hodge) and all the all-party parliamentary groups that are responsible for securing this debate today. What a great warrior my right hon. Friend has been on this issue over the years. This issue matters particularly in the United Kingdom because we have one of the biggest financial sectors in the world. That is not only a great asset to the country in terms of wealth, employment, tax revenues and so on, but it gives us an opportunity and a responsibility.”
“Finally, will the Minister therefore clarify exactly where the Government stand on this rhetoric about competitiveness? Is it really the Treasury’s view that we should advertise around the world as a place where the referee will be weaker? If that is not the case, why does the Chancellor continually talk up competitiveness as the key factor in post-Brexit financial services regulation?”
“I believe the Government are in danger of making a big and serious mistake here. Having left the financial services sector out of the Brexit deal, they give the impression of casting around to give the sector a deregulatory consolation prize, but that could pose big risks for the public, which we all know about. First, there is the obvious risk that the UK could be made an easier home for illicit finance, fraud and money laundering. We already need stronger action on that front, not a weakening of the rules. Secondly, the public could be exposed to more risk in the event of company failures, and we should have learned how big those risks can be. The post-Brexit future for our financial services sector should not be a weakening of public protection in the name of competitiveness.”
“As ever when there is a new task for the FCA, the question is whether it is equipped and resourced to handle it. There are reports of significant FCA vacancy rates and, of course, the organisation is still trying to recover from the London Capital & Finance scandal. How confident is the Minister that the FCA can implement the new prudential regime for investment firms mandated by this instrument? I would like to ask the Minister a broader question about the Government's post-Brexit approach to financial services. The Chancellor has talked a lot about competitiveness being the guiding light for that, but does the Minister accept that it could set a direction that exposes the public to significantly more risk, and may not even be wanted by the financial services sector itself?”
“The first question on that is whether there is any increased risk to the public and the taxpayer by placing these non-systemically important firms in a different regulatory regime from the biggest seven or eight companies, which are covered by the capital requirements regulation? The Government are making a distinction between deposit-taking and non-deposit-taking institutions. The explanatory notes say that to include all firms in the CRR would entail costs that are “disproportionate, burdensome and inappropriate”. However, that is what people always say when they want to weaken regulation. The other side of that coin—whether it is disproportionate, burdensome or inappropriate—is risk. What account have the Government taken of the risks of separating out the companies into two different regimes, as this SI proposes?”
“There may be good reasons for that, given the size of our financial sector, but the mid-tier banks say that it is a barrier to their growth and to competition in the banking sector. Can the Minister tell us anything about what is happening with the MREL rules for mid-tier banks? The other major point in this SI concerns the investment firms prudential regime. This is not simply an onshoring; it is a new regulatory regime. It applies, as the explanatory notes confirm, to “non-systemic investment firms”. In layperson’s terms, that means investment firms that, if they fall over, do not pose a threat to the whole system.”
“As the Minister will remember, the accountability framework for the PRA was amended during our debates on the Financial Services Act so that the PRA will have to have regard to our net zero commitments. However, that condition does not kick in until January of next year; does it apply to the changes made in this statutory instrument or not? Thirdly, paragraph 7.17 of the explanatory notes refers to capital requirements. This is not strictly covered in this instrument, but may I ask the Minister about the capital requirement rules in relation to challenger banks and the rules on MREL—the minimum requirement for own funds and eligible liabilities? As the Minister knows, the Bank of England has consulted on this. Currently, we have a tougher regime on MREL than exists in the European Union or the United States.”
“Let us start with the CRR, the regulation embodying our Basel III obligations—that is to say, the capital requirements agreed at an international level after the financial crisis. Like many of the directives we have onshored, the UK played quite a big role in writing it in the first place. First, I want to ask the Minister whether he can confirm that the onshoring of the CRR as set out in this statutory instrument does no more than change the supervisory body for implementing the Basel III rules, and does not change the terms of what the UK was going to do in that regard in any way? In other words, is it simply an onshoring process rather than a change in regulatory content? My second question relates to the accountability framework of the PRA, who will take this job on. This issue was raised in yesterday’s debate in the Lords.”
“There is a sense of déjà vu about these regulatory debates, partly because of that family tree. We debate the same things over and over again, first in primary legislation, in this case the Financial Services Act, and then in statutory instrument form. However, it is also because there are some common themes to the whole discussion about onshoring regulations in the post-Brexit future for our financial services sector, so let me ask the Minister a few specifics about the terms of the instrument. I must say, in that regard, I am grateful that this instrument was debated in the other place yesterday and we have the benefit of their Lordships’ wisdom, for those of us who have had the chance to read that debate.”
“Thank you for chairing our proceedings today, Ms Elliott. I am also grateful to the Minister. The truth is that it is not easy to explain a set of regulations as complex as these, but their complexity should not disguise the importance of the content of some of these measures. The instrument could be regarded as the son or daughter of the Financial Services Act 2021, which we debated this time last year, which in itself was the son or daughter of a number of European directives, so what we are really debating here is the grandchild of some European directives. The regulations do two main things: they onshore the implementation of the Basel III requirements under the capital requirements regulation and they establish the new prudential regime for investment firms.”
“That sounds like quite an important omission. We do not need to go over the history of it, but the Government themselves tabled an amendment saying that the regulators had to have regard to our net zero obligations. If I understand the Minister correctly, he is saying that it does not apply to the draft regulations, which implement the Basel III regulations—the main international post-financial-crisis measure of regulating banks to ensure that the taxpayer is not on the hook in the future. Is that not quite an important omission from the green direction that both of us want to see for financial regulation?”
“I appeal to the Minister, his colleagues and MaPS to structure the contracts in a way that ensures that face-to-face advice is there for those who need it and that the local knowledge in these services, which is so important, is not lost.”
“We will not know about the problems that might have been headed off, if only advisers had been able to see people and talk to them. We will not know about the mental health problems that go undiagnosed or untreated. We will not know about the person with literacy problems who did not get the help that might have made a difference to them, because many of the people with the most complex needs might not access the advice at all. I acknowledge that, overall, the Government have put extra money into this field during the pandemic and the last couple of years, but the money going into face-to-face advice specifically is being reduced.”
“The other factor here is that it is hard for the organisations involved to speak up, because they are bidding for money from the contracts and are worried that if they speak up too loudly, they might get on the wrong side of the Money and Pensions Service, the Department for Work and Pensions, the Treasury or somebody who is involved in making the decision. However, these issues have been raised with us, and they deserve serious consideration by Ministers. Nobody wants the world to stand still. We all understand that the way that services are delivered is changing. As I say, that might suit many people, but my plea to the Minister is not to design a service that cuts off the possibility of face-to-face advice for people who need it. If that happens, the problem is that we will not know about the evictions that could have been prevented.”
“We should ask ourselves whether an online service will really deal with urgent situations like that. There is also a problem with which we MPs are all familiar—the need to read between the lines. A person might come to see us with one problem, but as they talk, more and more comes out. We have all had cases like that, and often the initial thing that they raise is not really the biggest thing that has gone wrong in their life. That is something that we all recognise from our advice surgeries, and it is far easier to spot in a face-to-face meeting than through another channel.”
“Again, face-to-face contact can provide that level of privacy. Thirdly, representation to courts can be crucial, such as in threatened eviction cases. That is often based on local knowledge of key local authority or court officials. It is very unlikely that a call to a call centre or the use of an online service will replicate that kind of targeted local intervention, and those interventions can make a big difference. As such, my plea to the Minister is this: if debt advice is to be reformed, let us ensure that those who need face-to-face advice can still get it. One feature of debt advice is that people sometimes do not seek it until very late in the day—maybe just a day or two before they face drastic action from a creditor. A face-to-face adviser can know the urgency and make a lot of calls very quickly.”
“They do not always find it easy to navigate online forums or to realise immediately the key parts of a letter that they might have received, and as we have heard this morning, some people cannot even face opening correspondence because they know the direction in which their situation is heading. It is not always easy for people to admit that they have a literacy problem, but this is an area in which a face-to-face adviser can provide invaluable help. The second point is privacy. In some cases, domestic violence or fear of a partner can be an important factor. We have heard about financial intimidation within households: people in those circumstances do not want a phone call to be overheard, or their partner seeing which website they are on or who they might be talking to online.”
“However, online advice will not be suitable for everyone, particularly those with the most complex debt needs, and the fear being expressed this morning is that if the right balance is not struck, people could lose out on the face-to-face advice that they need, with some very damaging consequences for them. Right now, it is feared that the number of face-to-face advisers could be cut by around two thirds under the plans that have been put forward. Let me quickly give the Minister some examples of where that face-to-face advice is particularly valuable. I am grateful to the debt advisers who took part in a call with me yesterday in preparation for this debate. The first point is literacy: a significant proportion of the people with the most complex debt needs may also have literacy problems.”
“The Government have put more money into debt advice since the start of the pandemic, acknowledging the rise in need that is reflected in the figures that have been quoted over and over again in this debate. However, the balance of how that money is spent is changing markedly, from face-to-face advice to online and telephone advice. That is the crux of what we have been talking about this morning. Of course, it might be that online and telephone advice is suitable for some people, and can help them with their problems. We all understand that the world is changing, and that we should make use of technology in delivering public services—nobody is arguing for the world to stand still.”
“It is against that background that the Money and Pensions Service is changing how debt advice will be delivered. As we have heard, debt advice is crucially important, because it can make the difference between someone being overwhelmed by their debts and their finding a way to control them and, hopefully, pay them off over time. Good advice on that front can make the difference between a person being evicted and their keeping their home, and in some cases, as we have heard, it can actually save lives. I acknowledge the work that the Government have done to institute a breathing space that gives people protection from enforcement action for a specific period during which a manageable repayment plan is organised; but access to that breathing space is itself dependent on accessing proper debt advice.”
“For those families, the pandemic was really tough financially, and it added hugely to the pressures they were already under. That took place over the past 18 months, but right now, looking forward, we have rising inflation, rising energy bills and a series of tax rises that will come into force in April next year. The charity StepChange estimates that 14 million people faced a fall in their incomes at the start of the pandemic, and most of those did not experience a quick recovery. It estimates that 4.3 million people are behind on bills such as council tax, rent or utilities. One in three of those who are in difficulty have had to resort to measures such as skipping meals or rationing the use of utilities, and one in four of those who accessed payment holidays during the pandemic have subsequently missed a payment.”
“That is the key factor behind the rise in bank deposits that we saw during the pandemic—something that happened not just in this country, but in most comparable countries. That is the story of one Britain. However, the other Britain that we have been hearing about this morning is a very different story. Here, families on low incomes saw their expenses increase. They were at home with the heating on all day. They had children who were off school, who needed to be fed more at home than was usually the case. Those families could not afford holidays or eating out in the first place, so they were not saving anything through the absence of those options, yet they had extra expenditure pressures and, of course, some people fell through the gaps in the various Government support schemes, be that furlough, self-employed grants or other support.”
“I begin by paying tribute to the advisers who are trying to help people in those circumstances: to the citizens advice bureau and other agencies in my city of Wolverhampton, and to all those around the country that we have heard about this morning. We come to this issue after a year and a half of the pandemic. The pandemic had contrasting effects around the country for people, financially. It was, in many ways, a tale of two Britains. In one Britain, people were able to work from home, were paid at or near their full salary, and yet saw their expenditure reduce—they were no longer spending on holidays, restaurants or other forms of entertainment—and were able to save money.”
“Thank you for chairing our proceedings this morning, Ms Bardell. I congratulate and thank my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) for securing the debate, and thank all hon. Members representing different parts of the country for their contributions. When people fall into serious debt that they cannot manage, it is one of the most stressful experiences in life. Multiple debts can lead to people feeling overwhelmed, being pursued by creditors, having mental health problems, in some cases losing their home, and, in even worse cases, trying to take their own life.”
“That has borne down on real incomes and on public services and their capacity to improve wellbeing. Low economic growth over the past decade has adversely impacted on the quality of life in places such as Wolverhampton, which I represent, the Black Country and many other parts of the country. It has left the public square impoverished and degraded. In arguing for a broader view, we should not make the mistake of thinking that low growth or no growth is a good thing. The experience of low growth over the past decade suggests that that is very much not the case. I am all for a broader definition, I am all for greener growth, but I also want to see prosperity in every part of the country.”
“In so doing, it will create many jobs, reduce people’s heating bills and make a material contribution to the wellbeing we have heard about today. We will also want to invest in the charging infrastructure for low-carbon transport, and many of the other changes we need. That is what we want to do. Let us not be entirely dismissive of GDP and the importance of economic growth. For the past decade, we have had, as it were, a real-world experiment in what it is like to live through low growth. We have high taxes now because economic growth has been low. That anaemic growth over the past decade means that we are a less prosperous country than we would have been had we had higher growth rates—for example, the kind of growth rates that we had in the first decade of this century.”
“We do, after all, have only one planet, and we have a duty to cherish and preserve it for future generations. This debate also forces a discussion on not only the costs of acting, but the costs of not acting. The Office for Budget Responsibility report earlier this year was very clear on that point. If we delay taking the necessary action on the transition to net zero, it will not make the costs disappear. Instead, it will increase them in the longer run, adding to our debt and our deficit, and loading further costs on the taxpayer. That is why Labour announced at our recent conference a commitment to investing in this transition year on year for a decade. That commitment will help to ensure that the homes we live in are heated in a sustainable way.”
“As a material measure of output, GDP is certainly not the same as general happiness. That is why in my party, for example, my hon. Friend the Member for Wirral South (Alison McGovern) has argued that the Office for National Statistics should measure health and happiness through a healthy living index. We have heard about what the Welsh Labour Government are doing, putting wellbeing at the heart of their thinking. As we transition to a cleaner and greener economy, we will want to take into account other things, most obviously the sources of our energy and how renewable they are. We will want to ask different questions—not just, “What did you produce?” but, “How did you produce that?” All that will have to be a greater part of our economic thinking.”
“Thank you for your chairmanship today, Mr Betts. I begin by congratulating the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate and thank all the hon. Members who have taken part over the past hour or so. The debate on the relationship between wellbeing and the traditional economic growth measure of GDP has been going on for a long time. We welcome an emphasis on wellbeing and on not measuring everything purely by traditional economic statistics. As we have heard, there are deficiencies in GDP. For example, it tells us nothing about equality or the level of social inclusion in a society. That is what it does not include, but it does include things we might not want to include, such as measures of waste or of throwaway goods that are bad for our environment.”
“I thank the Secretary of State, the NHS and everyone responsible for the booster programme that is helping to protect us as we enter the winter months, but is not one of the lessons of the news he has announced today that, if we do not tackle the enormous vaccine inequality around the world, we will continue to be exposed to new variants of this type? In Africa, for example, just 6.6% of the population have been vaccinated. Of course, it is every Government’s first duty to protect its own people—everyone understands that—but does he agree that the United Kingdom and other rich countries in the world must do more to ensure that surplus doses that we do not need are distributed to countries that do need them, rather than not being used and ultimately, in some cases, destroyed?”
“Time has already been lost this year, and I will close by urging the Minister—I know he wants to help on this issue—to get on with it, so that in relation to these products, consumers have the protection and information that they have a right to expect.”
“Will the regulator codify that properly, given the proportion of revenues that some companies are raising from that activity? Finally, returning to the timescale, can the Minister ensure that once the consultation closes, there will be no further delays and the FCA will be able to act as soon as possible, whatever the outcomes of that consultation? Given that the Woolard review reported near the beginning of this year, we certainly do not want to roll all the way through next year with no regulation in place. This is a very fast-growing new form of consumer debt. Regulation has not kept up: it must do so, or else it will ossify and become out of date.”
“As the Minister knows, the weakness of the FCA’s financial promotion rules has already been a factor in the case of London Capital & Finance, which we debated in relation to other legislation recently. How will the regulations ensure that advertisements and promotions convey sufficient information about the nature of the credit agreement being entered into and the risk of incurring debt and penalties? Will consumers be told, for example, that non-payment could result in their debt being transferred to a debt collection agency? That is quite important, and might give people pause for thought when they take out such a product. Also, how do we treat consumers who get into difficulty? Right now, there is a mix of late payment fees and the use of debt collection agencies.”
“Does the borrower understand that this is a debt, and that they may be subject to penalty charges and increased costs if payments are not kept up? As we have heard, that is often not made clear. What is to stop consumers setting up multiple buy now, pay later products with multiple companies? How will one know about the other? Does the consumer’s bank know about the other products? What if the consumer is already heavily indebted to their bank? That featured in the Woolard review, which implied that about one in 10 buy now, pay later account holders might already be quite significantly indebted to their bank. What should the rules be on advertising and promotion?”
“We have lights on the inside, we have lights on the outside and, whether I like it or not, we have an awful lot of Michael Bublé. But it is no secret that the festive season can be an expensive time for people and that, for some, December spending can result in a January hangover. That makes this debate both timely and important. Innovations such as buy now, pay later were not envisaged when the Consumer Credit Act 1974 was passed, and that is why this gap must be filled. When it comes to updating the regulation system, the Government need to act and get on with it. What might the new regulations cover? The slightly reluctantly worded consultation gave some clues, but there are obvious areas, and I want to name a few. The first is information to the borrower.”