New Clause 4 — Power to make further provision about regulation of consumer credit
Financial Services Bill (Programme) (No. 3)
Christopher Leslie (Nottingham East, Labour)
The hon. Gentleman might know that in annual pension statements, for example, in the key facts documents a number of scenarios are put forward for what the pension might be worth under a range of growth options, such as annual growth of 3%, 5% or 9%. All I am seeking to do is ask the Financial Conduct
Authority to consider a way of giving a range of scenarios and helping to provide information for customers, which would not be impossible. That is why I think that that is necessary for mortgages. I hope that hon. Members on both sides of the House will support what is a pretty modest change. It is something that I know we are all concerned about. The Government definitely need to go away and look at the issue again.
Amendment 37, which also stands in my name, relates to the Consumer Financial Education Body, which we now call the Money Advice Service. We are seeking to amend the Bill so that it specifically targets
“proactive and easily accessible advice to those encountering economic disadvantage, financial exclusion or financial exploitation.”
In our view, it is vital that the Money Advice Service focuses as much effort as possible on the vulnerable and those susceptible to problems, whether as a result of misinformation or choices made in financial investments. We know already, from examples in our surgeries, that those on the lowest incomes—the most vulnerable in society—need to be better protected in legislation, and that is why the new clause has been tabled.
The Money Advice Service has started off its work by focusing on providing information to people from all corners of society, whether very rich, middle-class or on low incomes, but if it is to ramp up its work it needs to start by helping, as a priority, those on the lowest incomes and building from there, because they are the ones whose lives are most affected when investments, saving and borrowing go wrong.
There has been some criticism of the Money Advice Service, given the way in which much face-to-face advice has been outsourced while it concentrates on a web-based approach. There have been significant job reductions at the service, it has de-prioritised face-to-face services, and there has been a reliance on citizens advice bureaux and on debt advice agencies, such as those in my constituency. I visited St Ann’s welfare advice centre in Nottingham this week, and the level of cuts that it is experiencing is appalling. Whether because of legal aid reductions or local authority grant cuts, the ability of organisations to give face-to-face debt and welfare advice is shrinking day by day as the number of appointments that are available declines and the time that can be committed to support people disappears.
That is why the new clause would explicitly encourage the Money Advice Service to help those who are financially excluded or in financial distress. I am sorry that the Minister said we should not prescribe “particular groups” in the Bill. We are not talking about a particular group; we are talking about some of the most needy in society. That is why the new clause is very important indeed.
Finally, I turn to amendment 40, which I know my hon. Friend Stella Creasy will speak to. We discussed its provisions in Committee, and although we will not have a chance to vote on it today, because—for various arcane parliamentary reasons—if there is a Division it will be on day two of our proceedings, we will certainly debate it today. It is right that we ask the Financial Conduct Authority to make rules or apply a sanction to authorised persons if they offer credit on terms that are judged to cause consumer detriment, and those rules should include the
maximum total cost for consumers of a product and should determine the maximum duration of the supply of a product or service to an individual.
The Minister’s rebuttal of the proposal was very disappointing. He said that we should not be “distracting the regulator” by including, explicitly in the Bill, that particular power, but sometimes writing and enshrining such provisions explicitly in a Bill does matter. The Minister also said that the provision might get us into a “long laundry list” of circumstances and be a “knee-jerk” response. He even said that it was a “political whim”, but that really is not the right approach to take when trying to find a consensus on tackling high-cost lending, particularly when so many of our constituents get sucked into that world and are often ripped off in the process.
The Minister did not even know when the research, which has been around for heaven knows—[ Interruption ] —for 18 months, my hon. Friend the Member for North Ayrshire and Arransays—will come to fruition. If ever there were a definition of political long grass, that would seem to be it. He should get his mower out, cut the grass, get on with the process and tell us when the research is going to come to fruition. We want to see in the Bill a specific commitment to make these powers available for the Financial Conduct Authority. Heavily indebted individuals are burdened in any number of ways, and if things get worse and they are sucked into high-cost credit arrangements, that can be difficult.
There are some circumstances—emergencies, or bridging-loan arrangements—when some individuals might need to tide themselves over for a short time, but sometimes the administrative costs of such very short-term loans can result in a charge that, when looked at through the prism of the APR, look especially high. We do not want rules that completely freeze out people’s ability to secure bridging loans in such exceptional circumstances, but the point is that they should be exceptional circumstances; people should not be sucked into dependency on high-cost credit arrangements. The duration of their dependency needs to be regulated, and we should look at the total cost involved, and perhaps prevent the roll-over of some arrangements.
I commend my hon. Friend Stella Creasy and the hon. Members for Kettering (Mr Hollobone) and for Worthing West (Sir Peter Bottomley) and others who have signed up to the amendment. It is a cross-party issue that has come up on several occasions, and I wish my hon. Friend well with it.