Clause 9
6:30 pm
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
I beg to move amendment No. 33, in clause 9, page 5, line 8, leave out paragraph (c) and insert—
‘(1A) Account providers will be required to send statements to the holder at not less than 6 month intervals.’.
I have tabled amendment 33 to reduce the sense of abstraction in the Bill. I share the frustration of the hon. Member for Taunton that we have had to go through the process of tabling probing amendments to be able to tease out some principles and numbers underpinning the Bill, but I suppose that that is how Parliament works. I believe that the child trust fund was established on a similar principle of broad enabling legislation followed by statutory instruments. In fact, next Monday afternoon, I am down to debate a statutory instrument on the child trust fund, which shows, I suppose, that such regulations come up for discussion, from time to time, long after an Act ceases to be a live political issue.
The abstraction that I am seeking to reduce relates to the statements that providers are required to produce for account holders. That cropped up in the evidence session last week when we discussed the frequency of the requirement to produce a statement. Potential account providers talked about six months being an appropriate interval—and lo and behold that number appears in regulations. A balance needs to be struck between keeping consumers informed about their contributions and trying to reduce the cost of the provision of statements. Every time a statement is sent out, there are printing, paper and postage costs, which add to the cost of providing these accounts. For accounts with relatively few transactions, six months does not seem a bad interval for the provision of statements.
A point was raised about whether a statement was necessary and whether alternative ways of providing the information to customers could be found. Adrian Coles, from the Building Societies Association made that point when he gave evidence. He said that a passbook approach might be an alternative to a statement, because it would certainly provide much of the information required—it would provide a balance at any point, show payments in and out of the account, and provide details of the account holder, such as name, address and postcode, and the closing balance on the statement date. The only piece of information that it would miss out, according to draft regulations, is a provisional calculation of maturity payments. If that requirement was not in the regulations, a passbook might be an appropriate alternative to a statement.
The banks made the comment that the more information prescribed in regulation, the more expensive the statement will be, and that a programme to calculate the estimated maturity payment would be needed. In a way, we should be relaxed that banks are big enough to bear some of those costs, but if credit unions were required to provide such information, it might add to their costs and reduce the attractiveness of those products to credit unions. Are the Government clear that six months is the absolute minimum, or could a longer period be used? Might Mr. Coles’s passbook proposal be an appropriate alternative to the provision of a statement?
Ian Pearson (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)
Let me not reiterate the previous arguments about why this issue is better dealt with by regulations than in the Bill. There is a clear case that according to the framework of legislation, the principles should be in primary legislation and much of the technical detail in regulations. This matter falls into the latter category.
The hon. Member for Fareham mentioned the evidence of Adrian Coles of the Building Societies Association. He is therefore aware that we continue to have a dialogue with potential account providers and their representative bodies. There may be alternative methods of communicating with account holders, such as through passbooks, which he mentioned. It may also be possible by e-mail, although I require convincing that contact by e-mail will be sufficient. Many of the low-income groups that we are talking about kick-starting the saving habit among are unlikely to have easy internet access. However, the BSA made a valid point that we will continue to explore.
The draft regulations indicate that six months is the appropriate period. We think it right that regulations provide the flexibility to alter the frequency of statement issue. We also think it right that savers are made aware of the current balance on their accounts. We must get the appropriate information out to savers while keeping to a minimum the burdens involved in doing so for account providers. That is another matter where we must strike the right balance.
We will continue to talk to account providers, the BSA, credit unions and others. We will return to this matter when we debate the affirmative procedure that will introduce the necessary regulations.
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
From his answers, it is clear that the Economic Secretary is aware of the tensions in this issue such as the trade-off between providing information to account holders and the cost of doing so. I beg to ask leave to withdraw the amendment.
Edward Timpson (Crewe and Nantwich, Conservative)
I beg to move amendment No. 37, in clause 9, page 5, line 8, at end insert—
‘(d) specify that a statement may be sent electronically.’.
The intention of the amendment was touched on by the Economic Secretary in his previous answer. I tabled it to highlight that the Bill and the attached regulations do not provide account providers the option to provide statements in electronic form. That is not to say that that should be the only form in which they could provide the statement. That could be done only with the consent of the account holder because not everybody has access to e-mail or to online banking.
The intention of the Bill is not only to encourage saving and make it more accessible, but to keep the costs down in the provision of the accounts. Allowing electronic statements would fit those principles. The findings of the pilots tell us that, generally, people were happy with the information that they received in their statements. However, there was an issue with timings. It was felt that statements tended to be a few months behind when they arrived. When people were making their final deposits, they were receiving statements for deposits made a month or two earlier.
The amendment would ensure that account holders were given up-to-date information about their account and felt some ownership of it to generate that sense of saving. It would also reduce the costs to the account providers who told us in the evidence sessions that their overheads in providing these accounts are extremely high compared with other similar accounts. That is a clear objective of the amendment. I hope that the Economic Secretary will take it into account when considering what is best for the provision of these accounts and the people they are meant to assist.
Ian Pearson (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)
To promote a saving culture, we believe that it is important that account holders can see their savings and their maturity payment building up over a period of time to demonstrate the benefits of having saved. We discussed this on amendment 33. I hope that I can assure the hon. Gentleman that it is not necessary or appropriate to include amendment 37. As he will have seen from the draft regulations, we do not intend to specify the form that statements have to take, but simply that they must be issued. This would permit them to be issued electronically and it would be a matter for the account provider to decide. He mentioned the ability to allow account providers to do that.
I draw a distinction between the suggestion that all saving gateway statements should be sent electronically—I can appreciate the environmental appeal of doing something like that—and the requirement that they have to be. I believe that there should be options here. Some account holders may prefer to receive their statements in a hard copy. I do not think that as a Government we should prevent that. We should also be mindful of the fact that not everyone has easy access to e-mail, so electronic communication could be very difficult. While I am sympathetic to the hon. Gentleman’s suggestion, I do not believe that the amendment adds anything to the Bill. Certainly this will all be contained in regulations. The way we intend to frame the regulations would permit statements to be sent electronically if that was felt the most appropriate way of contacting account providers. I hope he will feel able to withdraw his amendment.
Edward Timpson (Crewe and Nantwich, Conservative)
I am grateful to the Economic Secretary for clarifying the position in relation to electronic statements. It is clear from his answer that there will be the option for account providers to provide account holders with that facility. I beg to ask leave to withdraw the amendment.