Stephen Ladyman (South Thanet, Labour)

I beg to move amendment 19, in clause 5, page 3, line 36, at end add—

‘(3) Approved account providers must be persons who are regulated by the Financial Services Authority under the Financial Services and Markets Act 2000.

(4) Regulations may limit approved account providers to persons from any or all of the following—

(a) Banks;

(b) Building Societies;

(c) Friendly Societies;

(d) Credit Unions;

(e) Industrial and Provident Societies;

(f) Post Office Ltd.’.

I tabled this probing amendment to ask a number of questions of the Economic Secretary. The first part of it will give him the opportunity to confirm that every body providing one of these accounts will be an organisation regulated by the Financial Services Authority, which will thus mean that the people holding these accounts—if they have been wrongly advised about taking them up or using the money in them when they mature—would have access to the Financial Ombudsman Service to have their complaint investigated. That is more than an academic point because industrial and provident societies are not regulated by the FSA, so people invest in an industrial and provident society—as some people might wish to do—do not have access to the ombudsman. I am not suggesting that many IPSs are knocking down the door of the Government to set up these accounts, but they might want to in the future.

Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)

Is not one of the risks that if IPSs accept money under saving gateway accounts, they will be not only not covered by the FOS but—as members of the Presbyterian Mutual Society in Northern Ireland have found out—not covered by the Financial Services Compensation Scheme either?

Stephen Ladyman (South Thanet, Labour)

The hon. Gentleman makes an extremely good point. Again, that emphasises why I want the Economic Secretary to confirm that the only approved providers of these accounts will be those that are regulated in such a way that access to such protections exists.

The second part of the amendment, in which I have broken down various organisations that might provide these accounts, is there to give my hon. Friend the Economic Secretary the opportunity to say whether he intends to be permissive in allowing organisations to provide these accounts, or whether he is intending to use the provision of these accounts for other purposes.

One of the things that struck me in the evidence-taking session was the apparent reluctance of the banks and building societies to provide such accounts. They seemed to be taking the attitude that the job of creating new business for them is not theirs, but the Government’s. I regard encouraging people to save and to become prudent with their finances as the job of the people who provide accounts. When the supermarkets wanted to encourage people into their shops, they ran loss leaders to encourage people to use them. The banks seem to have no such ambition to encourage people to save. Indeed, they do the very opposite by providing the best rates of interest to the people with the most money, while providing no additional services to encourage people on low incomes to save. They are clearly reluctant to get into this market. I recall the difficulty that the Government had in making them provide basic accounts for people on low incomes—they almost had to dragoon many banks into providing them.

If the banks are reluctant to provide these accounts, why do not the Government use this scheme to encourage certain people, perhaps by restricting these accounts to  post office counters? Why not provide an extra opportunity for local post offices to thrive by saying that they are the only place where people can get these accounts?

Jeremy Browne (Taunton, Liberal Democrat)

I have some sympathy with the hon. Gentleman’s arguments, but the concern that I expressed in last week’s exploratory discussions remains valid. Will people who have a bank account be more inclined to open one of these accounts if they can open it with the bank with which they hold that account? If they have to have two accounts at two separate institutions, it might be a deterrent.

Stephen Ladyman (South Thanet, Labour)

The hon. Gentleman is quite right, and I am not promoting this idea as a proposition. I am simply asking whether the Government want the power to restrict accounts to individual organisations. I would think seriously about restricting the accounts to post offices and friendly societies to encourage those institutions. I am asking my hon. Friend the Economic Secretary, by  way of this amendment, whether he will have the power, through regulation, to restrict the sort of organisation that may provide accounts to those classes of organisation. If he says in the future, “I don’t want banks doing this, because I don’t trust them to do it properly and to provide the right advice; I want to limit the people who may provide these accounts to the Post Office and friendly societies,” will he have the power to implement that under the Bill?

John Bercow (Buckingham, Conservative)

The Committee will adjourn until 4.30 pm, not 4 pm, as is erroneously stated on the selection list. The room will be locked in the interim, and Committee members may safely leave their papers here if they wish.