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.”
The complete record
Every one of 5,181 lines we hold for Pat McFadden, in date order, each linked to its source. Free to read, in full, without an account. Page 27 of 104.
“At the heart of this failure is the halo effect of a regulated firm selling unregulated products. Recommendation 13 is about ensuring that the legislative framework keeps pace with the sale of products through technology platforms. This field of activity is growing daily. It is driven by technological innovation—the movement of more and more activity online—and perhaps by the increased time people have had during the lockdowns to invest online. I do not want to try your patience, Ms Ghani, by delving too deeply into that today, but I think that this issue will occupy the House and this Minister in particular over the next couple of years.”
“My hon. Friend makes a very strong point. The question of the perimeter is inescapable. One of Dame Elizabeth’s recommendations is that the Government consider the FCA’s remit, and the Government have said that they accept all her recommendations. The Minister said in his evidence to the Select Committee that this cannot be pinned on the perimeter, as it were, but as a conclusion of what has happened the perimeter must be considered. The Government have accepted that. One way to deal with this is to say that regulated firms and regulated products must be brought together—I shall be grateful for the Minister’s response on that—but if that is not deemed to be the right response how will the question of the remit and the perimeter be responded to?”
“It is really just a question. The Committee has received a number of representations from LCF investors about this 80% level. What is the Minister’s response to those representations? If LCF investors were here and were allowed to speak, they would say, “Why is it that those who invested after getting financial advice get 100% of the FSCS level because financial advice is a regulated product and therefore covered by the FSCS in full but we are getting 80% of that level?” What is his response on this differential treatment of the two types of investors?”
“That is already an issue, which we have debated in the context of other SI. If someone is sending a few hundred pounds to a relative possibly in a country that is much less wealthy than ours, the last thing they want is for a lot of that to be eaten up paying out to administrators. Finally, when it comes to transferring assets, how will the insolvency practitioners deal with assets that are held abroad? Some of the organisations are international, with assets in the UK and assets abroad. Does the proposed regime just apply to UK assets or is the intention that the resolution process will also include assets abroad?”
“As the Minister said, the regulations propose a bar date—a cut-off point—to avoid a long drawn-out process that takes years to conclude. The logic of that is completely understandable, but how will the administrator be guaranteed to make reasonable, in fact extensive, efforts to contact people who might have claims? The last thing we want is someone coming along and saying, “I never knew about this. I didn’t know it was insolvent. I have got assets in this”, and then a legal case pursuing. Some of the firms will be involved in transferring remittances. That is a very important business for the UK as we have a population with roots all over the world. How will the regulations help consumers not to be hit with excessive costs in the event of foreign exchange transactions?”
“What happens if the asset pool is too shallow to cover the liabilities. The Financial Services Compensation Scheme does not cover the institutions in question, and that was raised in the consultation. Why is that? At least one respondent argued that the FSCS should have that remit. On capital requirements, I am sure that, like me, the Minister is regularly lobbied about how much capital institutions have to hold. One insurance policy against insolvency is to hold a reasonable amount of capital. Has the Government considered—I can hear the industry objecting to this as I speak—increasing the capital requirements to make insolvency less likely and to make the companies more resilient if they run into trouble?”
“The regulations relate to insolvency and ensuring continuity of service and payments where insolvency takes place. The regulations talk about an asset pool and the administrator having governance over that. The question in my mind goes back to Mr Micawber, and what if the asset pool is too small for the liabilities? Is that not the definition of insolvency, when someone has liabilities of 20 shillings and income or assets of 19 shillings? How can the administrator guarantee that people will get their money back from the asset pool if, by definition. the firm is insolvent? Are we talking about getting so many pence in the pound, rather than the full investment back? Or is it a question, as is often the case in insolvency, of a hierarchy of creditors, where some people—often the taxman—are first on the list and others are lower?”
“The Government are trying to take that idea and apply it to electronic money institutions. The policy aim is to speed up the process in the event of insolvency and stop it taking years to conclude. A consultation on the regulations was carried out between December and January which pointed to six recent cases of insolvency in payments or electronic money institutions, some of which have gone on for three years or more and in only one case had people received some of their money back. The consultation only attracted 15 responses out of those 1,300 companies, so it was fairly thin, although in fairness, I think that the responses included one or two from trade bodies, so they may have represented a number of firms. Most of the responses broadly agreed with the Government’s action, so I have just few questions for the Minister.”
“The Minister spoke of 1,300 firms to which the regulations could apply to ensure cover, and the impact assessment tells us that those firms currently hold about £17 billion of UK assets. It is true that as the financial sector changes, so must the regulatory and legal system around it. The idea of resolution or winding up a failed financial company has been a much bigger policy priority since the financial crash, because that exposed how difficult some of the process is given interconnected payments, all sorts of different claims on assets and so on. After the crash, a special system was developed for investment banks. The collapse of Lehman Brothers involved a long, complicated process and it was thought that a special resolution regime was needed for such institutions.”
“Thank you for your chairmanship, Mr Davies. Even by the standard of Treasury SIs, this is fairly technical material that we are discussing today, and I am grateful to the Minister for his explanation. Last night in the Chamber during a different debate, I challenged the Minister that legislation and regulation needed to keep up with financial innovation. In that context, we were talking about frauds, scams and such things, but the point still holds in respect of the regulations, so I am certainly not going to oppose their intention. As the Minister said, the regulations have arisen on account of financial innovations and the growth of electronic money institutions and payment institutions and so on. The non-bank sector has become a far bigger part of the financial ecosystem.”
“The Bill aims to compensate the rest up to 80% of the £85,000 FSCS limit, meaning pay-outs of up to £68,000 for those eligible. This is expected to cost the taxpayer about £120 million.”
“I am grateful to the Minister. As he said, the Bill does two things: it enables a Government compensation scheme for the victims of the collapse of London Capital and Finance, and it authorises a Government loan to the Fraud Compensation Fund—part of the Pension Protection Fund—to be paid for through a levy on the pensions industry. Let me take each of those of turn. I will start with clause 1 on the LCF compensation scheme. The Minister set out the background and I do not need to repeat it in this short debate, but it involves 11,500 investors losing a total of about £237 million. Some £56 million has been paid out by the Financial Services Compensation Scheme to just under 3,000 of those investors, covering those parts of LCF activity that came under the remit of the Financial Conduct Authority’s regulated activities.”
“Had the FCA acted earlier, far fewer people would have invested through this firm, losses would have been lower and the taxpayer would not be faced with the £120 million we are talking about today.”
“I am grateful to my hon. Friend, and I do think it ill behoves any Member, given the scale of the losses and given the necessity of the Government to bring in this Bill to compensate people for their losses, to profit from this either directly or indirectly. I think that should be clear to all of us. The Government are legislating on this because of the litany of regulatory failures set out in the report on this issue carried out by Dame Elizabeth Gloster. These failures included failures to respond to repeated warnings from investors and potential investors, LCF repeatedly running promotions implying its products were regulated by the FCA, and failures of communication between different parts of the FCA, all in the end leading to this collapse and financial loss.”
“The answer is not just compensation when people lose money; it is to protect people against financial scams happening before they lose their money, to crack down on the fraudsters while they are peddling their scams and to stop these adverts reaching people in the first place. Not all thieves wear masks. It is possible to rob people of their money through misleading websites and illusory promises of financial gain. It is critical that the laws that we pass in this place keep pace with the innovations in fraud and financial crime that are taking place. For that to happen, it will take a lot more than the two clauses on compensation in this Bill.”
“What unites both these clauses is people being subject to fraud, often through online advertising. There is a clear need for greater action on this. People are being bombarded on a daily basis with adverts for investments, some of which are scams and attempts at fraud. Financial innovation can be a great thing, but consumers need help in navigating this world, and they are currently being failed by a regulatory system that is lagging behind what is actually happening in the financial markets. There is an online harms Bill coming that, as things stand, does not include plans to crack down on financial crime. I urge the Government to think again on that. To proceed with that Bill without tackling online financial harm would be an enormous lost opportunity to protect consumers against this type of crime.”
“Of the small number who take up the option, 72% say they do something different from their first inclination after receiving advice, so it is clear that such advice can help people to make a better decision, yet take-up is nowhere near the promise made at the time. The promise of pension freedoms being matched with good, trustworthy financial advice has not been kept, and these levies, which will have to be paid by the pension schemes that have been nowhere near fraud and are trying to offer a good service to their members, are being put in place at least in part as a result of the Government’s own pension reforms, which have left more pensioners exposed to fraud and scams. That conclusion was endorsed by the Work and Pensions Committee in its recent report.”
“Now we have a new fraud levy to boot. Surely the right way to tackle this issue is to ask why more and more pensioners are being exposed to fraud and scams in the first place. Why does the Minister think that is happening? Why are more pensioners losing their money? When the previous Chancellor introduced the pension freedoms changes, he said that “there will be free impartial guidance available to all.” Six years on, the take-up of that advice is just 3%. Even when the Department for Work and Pensions made a targeted push to increase it, it only got up to 11%, so the vast majority of people using these freedoms are not using that service.”
“The Bill authorises a loan to be made as a consequence of greater than expected claims on that fund arising from the Dalriada case. It is estimated that the judgment in that case could result in claims of over £300 million. The loan will be funded by a levy on the pensions industry, to be paid back over the next 10 to 15 years. That comes on top of the levy to pay for the Financial Services Compensation Scheme rising sharply since the introduction of the Government’s pension freedom legislation in 2015. Back then, the levy was £300 million; this year, it will be over £1 billion pounds. That is a 48% increase on the previous year and more than triple the level of five years ago. Why does the Minister think the FSCS levy has had to increase so much since the pension freedoms legislation was introduced in 2015?”
“Or does the Treasury accept the statement from the Parliamentary Commission on Banking Standards quoted in the report that “A buck that does not stop with an individual...stops nowhere”? These broader questions matter, because with ever more complex financial markets, the regulators have to be equipped to do the job—equipped through their leadership and their systems, but also through the resources at their disposal. Part of the backdrop to this is the FCA taking on responsibility for tens of thousands more firms after it took on the responsibilities of the Office of Fair Trading back in 2014. Is the Minister confident that it has the resources after the LCF collapse? Let me turn to clause 2 and the fraud compensation fund.”
“The Gloster report was also the subject of a well-publicised disagreement between Andrew Bailey, the Governor of the Bank of England, and Dame Elizabeth, about the nature of responsibility and accountability. Where do the Government stand on this issue? It was all played out before the Treasury Committee in several hearings. Is it the Treasury’s view that senior officials in leading regulatory bodies are responsible for the failing that happen on their watch, or should responsibility apply only to the organisation collectively? Does the Minister agree with the statement in the report that “It is difficult to see why an individuals’ willingness to take on challenging tasks in public bodies should absolve them from accountability”?”
“Another question for the Minister is this: what will the FCA do to improve its handling of reports like this? Then, there is the so-called halo effect of regulated companies selling unregulated products. Being regulated by the FCA featured heavily in LCF promotions. The financial promotions team at the FCA did warn LCF to dial back on the advertising, but the pattern went on and on, and no one drew the conclusion that this was not just an advertising problem, but a problem with the content of what it was actually selling. Dame Elizabeth states in her report: “A substantial proportion of the Bondholders said that they would not have invested in LCF had it not been for the fact that it was regulated by the FCA.” How will the FCA avoid the difference between unregulated activity and regulated companies from being exploited in the future?”
“He warned that LCF had one customer who was worth—bear with me on the language, Madam Deputy Speaker; I am quoting— “the square root of bugger all” and he tried to raise warnings about the practices and health of the company. It appears that that letter was lost. One of the more damning findings in Dame Elizabeth’s report is that, even if the letter had not been lost, “It is unlikely that it would have resulted in any, or any substantive, action or re-action by the FCA.” So little faith did she have in the processes that she appears to have argued that it did not matter that that warning letter had been lost because it would not have been acted on. Imagine if the FCA had acted, in 2015 or 2016, when those reports were received, rather than only at the end of 2018.”
“What they’re doing is they’re paying the money out, the interest out from money which people are paying on the bond… In other words, it’s just a pyramid scam… they’re saying they’ve got charges on their property, security on them, assets on their property, of course they don’t have any assets. It’s all horrendous really, the whole thing”. There was call after call like that, and they were not acted on. They were not passed up the line, partly because the mini bonds were not regulated. In fact, one caller was told by the FCA call handler that it was not a scam. There was also the letter from individual financial adviser Neil Liversidge in 2015, three full years before the collapse of the company.”
“How confident is the Minister that the FCA can actually make the changes necessary to avoid a repeat of the findings set out in Dame Elizabeth’s report? Callers were phoning the FCA for three years before the company’s collapse. Appendix 6 of Dame Elizabeth’s report states that the FCA received 611 queries from consumers regarding LCF. That is not a random phone call at five o’clock on a Friday that can be missed; it is a pattern of people trying repeatedly to raise red flags and getting nowhere Individual A said on 15 July 2016: “This company is doing exactly what the pyramid scams are doing.”
“In the case of LCF, it was bonds that were being sold, and the advertising implied a guaranteed pay-out when such pay-outs could not, in practice, be guaranteed. Regulation is not aimed at enabling people to make reasonably informed choices and to understand the risks they are taking. Having made the decision to offer taxpayer-funded compensation in this case, when does the Minister believe it justifiable that the taxpayer should be asked to do that, and when does he not? What was the discussion in the Treasury about how to ring-fence this failure and this company from broader claims for financial compensation? There are calls for compensation quite regularly when investment failures happen. How confident is the Minister that the Treasury will not be subject to legal action from victims of other investment failings?”
“I understand that the Government want to avoid the involvement of claims management companies, and that is something I think we would all endorse. How will the Government do that and avoid repeated rounds of claims? The Bill also gives rise to some important broader questions about policy. The failings identified were serious and substantial, and have to be addressed. The first of those broader questions is: when should compensation paid for by the taxpayer be paid and when not? The Minister quite rightly said that the taxpayer cannot stand behind every investment policy. It would be unfair on taxpayers to expect them to do so, and it would produce perverse incentives. After all, we all know that the value of investments can go down as well as up.”
“Many investors did invest because they thought that these mini-bonds were authorised by the FCA, and they were not. A big part of the problem here is having a regulated firm marketing unregulated products. If I am right, the hon. Member’s constituents may be eligible for the compensation authorised by the Bill. Dame Elizabeth’s report makes it clear how badly the investors were let down by the regulator, and both the Government and the FCA have said that they accept the findings. I have a number of questions that I want to put to the Minister for his wind-up at the end of the debate. First, why is the level of compensation he has chosen 80% of the FSCS level? On what basis was that decision made? Secondly, how will this work practically?”
“Review is important—to go back to my first question—because if the result of everything is simply to lower payouts to people, with the savings not being passed on to motorists and the insurance companies pocketing the difference, we will have to return to the issue in future. The founding reason for it would obviously be open to huge question in those circumstances. The real test will be whether the savings made are actually passed on to drivers as a whole in future.”
“That protects the interests of the claimants, but we also have to protect the interests of all drivers who have to pay their insurance premiums, many of whom—probably most—may never make a claim. The question is whether the draft regulations get that balance right, between those different interests of drivers as a whole and those making a claim, and whether they preserve access to justice properly for people genuinely injured. The final thing I want to say to the Minister is about the review provision he mentioned. The 2018 Act states that there has to be a review within three years—I think that is in one of the early sections of the Act—but he also mentioned the period of a year.”
“How will the data be transferred securely between the insurance companies, solicitors’ firms and claimants? Finally, what is the Government’s estimate of the impact of that question of taking lawyers out of claims under £5,000? Does that mean, given that most or all of the tariff is below £5,000, that claimants must in effect represent themselves? What are the implications for access to justice? Motor insurance is rightly of significant political and public interest, because it is something that people are required to have by law; they have no choice about it if they want to drive a vehicle. The whole idea of the system is that claims should be honest and that there should be fair recompense for honest claims.”
“Secondly, given that both sets of draft regulations are all about whiplash, how will mixed claims be treated, where not only whiplash might have been sustained, but other injuries too? That is very possible in a road traffic accident. Thirdly, the draft regulations specify that the medical report must be provided through an online portal or by a doctor listed in the General Medical Council’s specialist register. Will the Minister clarify whether that means that a report from someone’s own GP would not be considered as a medical report under the regulations? That is most people’s point of contact if they have had an injury—they do go to see their GP. If that is the case, why is the GP’s report or letter not sufficient to corroborate the injured party’s claim? Fourthly, how will data be handled by the new portal?”
“I have a few questions for the Minister. The first thing, which most people will look at, is that central justification for everything, which is that the volume of whiplash claims and payouts was resulting in an increase in insurance premiums for everyone. The Government claim that motorists will see a reduction in their premiums as a result of the overall reduced payouts for whiplash. The explanatory memorandum published alongside the draft regulations predicts a reduction in premiums of about £35. First, how will the Government ensure that the insurance industry will pass on any savings as a result of the changes? What is to stop the industry just pocketing the savings and increasing its profits?”
“For example, if the injury does not last for three months, the payment is £260, which is a small amount of money. It then goes up on a scale to over £4,000 if the injury lasts up to two years. That is probably the main financial change here. There is also the requirement for a medical report through a portal known as MedCo registration, and I have a couple of questions for the Minister about that. There is the increase in the financial limit of claims through the small claims process from £1,000 to £5,000. The important part of that is that it is designed to take lawyers out of the process for claims under £5,000. There is also the FCA ban on settlements without medical reports and, in exceptional circumstances, a power for the courts to uplift the payout on the figures I quoted a moment ago by 20%.”
“Figures from the insurance industry suggest that in the decade prior to 2016, which is roughly when all this started—legislation is not always a quick process—there was a doubling of claims for whiplash, with an overall cost of around £2 billion a year. It is suggested that the rising whiplash claims drove up insurance costs for everybody else. That is what has spurred the Government on to introduce legislation. There are several elements of reform set out in these two statutory instruments. Probably the most notable is a new tariff of payment depending on the length of the effect of the injury. The important thing about it is that these tariffs are set at considerably lower levels than some of the whiplash payments that people have been receiving in recent years.”
“Thank you very much, Mr Hollobone, and thank you for your chairmanship this afternoon. I would also like to thank the Minister for his remarks. There is a long backstory to these regulations. The Minister mentioned the Civil Liability Act 2018, which in itself was a legislative response from the Government to the growth of claims for whiplash in road traffic accidents. The principle that I believe the Government ought to be aiming for is that there is a legitimate and easy-to-use avenue to claim for those who are genuinely injured, but at the same time it takes into consideration the costs to motorists as a whole.”
“The Government cannot just leave it to the consumer to have to take the initiative. The Minister is probably right that some consumers have approached the insurance companies because they have been driving a lot less this past year, but trying to phone any big company like that—I am not referring to any insurance company in particular—and get through the systems is not easy. I suggest that we need more from the Government. Surely there has to be some sort of pressure from the Government, some sort of deal here, so that if the Government are going to pass legislation like this, the very purpose of which is to save the £1.2 billion in payouts, then insurance companies have got to pass it on. Otherwise, what is the point of what we are doing here?”
“Some people, responding to the draft regulations, have said, “This is unfair, because you are treating one class of injury unlike another.” There is that argument, and I repeat it, but a lot of our constituents want to be reassured that the draft regulations will not have a broader ripple into their circumstances if, for example, they were injured at work.”
“For two reasons, I am grateful to the Minister for stressing that. First, those groups he mentioned—pedestrians, cyclists and so on—are not covered, and that is important. Secondly, the broader importance—I would be grateful if he can reassure us—is that this is a carve-out just for whiplash in road traffic accidents, and it will not affect injuries at work or other kinds of injuries in which the normal system of claiming through a court and having a judgment on the proportionality of the accident will take place.”
“When Lex Greensill was given his No. 10 business card, he had no contract and no job description, and there have now been reports that during the pandemic, the financial empire that he built may have lent Government-backed money based on invoices to companies that had never done business with his client, GFG, some of which say they had no intention of doing so. Will the Minister look into the issue of how this financing was structured and ensure that hard-working British steelworkers do not pay the price for Greensill’s collapse?”
“This is transformative for the family finances of those involved. The release of pressure and freedom conferred by such a change in their monthly finances makes a massive difference to people’s lives, and those who have benefited from being able to switch in that way talk of a great weight being lifted from their shoulders—and no wonder.”
“Three quarters of mortgage prisoners have loan-to-value ratios of less than 75%, and that figure was calculated before the increase in house prices over the past year or so. The Government claim that 70,000 mortgage prisoners are in arrears and could not switch even if they were allowed to. Let us look at what happens when borrowers with active lenders have been allowed to switch. The APPG estimates that someone with a mortgage of £165,000 will have paid an extra £24,000 over the past decade, compared with the Bank of England average SVR. In individual cases with active lenders, where borrowers have been able to switch the effects have been huge. The APPG cites the case of a borrower with the TSB who saw her rate reduced from 4.69% to 1.99% and her payment go down from £928 to £397 a month—a saving of about £500 per month.”
“Also, remember that in the mortgage market in general, only a small minority of borrowers are on SVRs; most are on a two or five-year fixed rate. That is how the UK mortgage market works for most people. The Minister said that half of those borrowers could switch now if they wanted to. However, when the affordability changes were brought in, the FCA assumed that it would be only a fraction of that number. Whoever is right, the question must be posed: why have so few of them switched if they had the ability to do so? It cannot be because they like being stuck on a rate of 4% or more. Nor is it the case that all of those borrowers are somehow at the top end of loan-to-value ratios.”
“Since then, however, some of those lenders have gone bust and the mortgages sold on to inactive lenders. People have become stuck, often at the cost of paying thousands of pounds more per year than would be the case on a more competitive rate. An estimated quarter of a million borrowers are in that position. The Minister quoted some figures about how much extra people were paying and how that 250,000 was broken down. Some of those figures are disputed by the all-party parliamentary group on mortgage prisoners. Let us take the 0.4% that he cited. He said that people were paying, on average, only 0.4% above average SVRs elsewhere. That is disputed by the APPG. It estimates that mortgage prisoners have in fact been paying an average of 1.33% above the average SVR available, according to the Bank of England.”
“For mortgage holders—or the vast majority of them, at least—it has given them access to long-term fixed rates at a low level, enabling them to pay down debt and to finance their home ownership. Indeed, one of the policy aims of low interest rates is to help people pay down debt. However, one group has been excluded from the ability to fix their mortgages at low rates: those mortgage prisoners stuck on high standard variable rates with little or no ability to switch to competitive mortgage rates available elsewhere in the market. That is not how it started for most of those borrowers. They borrowed from regulated high street lenders such as Northern Rock, which were considered robust institutions at the time they took out their mortgages.”
“Of course there will be scepticism about that, because there have been consultations before and nothing has happened. However, we accept that this commitment, with the timetable set out, is a step forward. In any case, there would have to be a consultation before any such duty could be brought forward. We therefore encourage all the consumer groups, and anyone concerned, to take part in the consultation set out by the Minister. That brings me to the final issue of mortgage prisoners. We have been living through a period of historically low interest rates. Few people would have predicted that, 13 years after the financial crash, interest rates would be at their lowest levels in modern times. For Governments, including our own, that has enabled the financing of large deficits.”
“If we add to that imbalance a financial incentive to sell, we have the seeds of many of the mis-selling scandals that we have seen, with all the distress they have caused to individuals, plus, of course, the lengthy and extremely expensive processes of redress that the industry has had to establish. Would it not have been better to avoid the push selling of inappropriate products in the first place? That is the idea behind a duty of care. Its aim is to change the question in the seller’s mind from, “Is it legal?” to, “Is it right?” The amendment made in the Lords would empower the FCA to introduce such a duty. The Minister says that he is not convinced. Instead, his amendment in lieu proposes a consultation on the matter by the FCA.”
“Cashback without purchase might be part of the answer, but that alone does not fulfil the Government’s commitment to ensure a nationwide system of free-to-use access to cash. We cannot allow innovation in payments to mean that the lowest-income households in the country have to pay to access their own money. When will the Government get a grip of the situation and bring forward a proper plan for access to cash, even in a world where the total number of transactions paid for in cash declines? Let me turn to what are perhaps the more contentious issues before us. For many years, consumer groups have campaigned for a duty of care for financial services providers, because of the enormous imbalance of information between the sellers of such products and the purchasers.”
“Lords amendment 9 deals with cashback without purchase. There has been a significant decline in the use of cash during the pandemic, with a big move to contactless payments and payments online. We understand that this has many benefits for consumers—indeed, the pandemic has been called the great acceleration in respect of the many ways it has influenced our behaviour. Despite that acceleration, there will still be a proportion of the population who need cash, both for payments and for budgeting purposes. The Government promised to legislate on this issue at the Budget last year. Since then, it has felt like this is an ownerless problem, with the banks, LINK, the ATM providers, the regulator and the Treasury all somewhere on the pitch but no one really gripping the situation.”
“We also welcome Lords amendment 6 on the regulation of “buy now, pay later” firms—a cause championed with characteristic energy and determination by my hon. Friend the Member for Walthamstow (Stella Creasy). Again, we called for such regulation in the Bill’s previous Commons stages and the Government voted against it on Report. As financial services innovate, so must the regulatory boundaries. The regulation was recommended by the Woolard report, which was published in February, and we welcome its inclusion in the Bill. The new clause that has been inserted will be just the first stage of the process; the FCA will have to decide exactly how it will be done. Given the enormous growth in the use of such platforms over the past year or two, it is important that the regulator gets on with it as soon as possible.”