Financial Guidance and Claims Bill [HL] - Report (1st Day)

Part of the debate – in the House of Lords at 3:27 pm on 24th October 2017.

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Photo of Lord Sharkey Lord Sharkey Liberal Democrat 3:27 pm, 24th October 2017

My Lords, in moving Amendment 1 I will also speak—eventually—to Amendments 2 and 7. They form a linked package of consumer protection measures enabled by, and consequential upon, Amendment 1. I am grateful to the noble Lord, Lord McKenzie of Luton, the noble Baroness, Lady Altmann, and the noble Earl, Lord Kinnoull, for adding their names to the amendments and for their support for them. Amendment 1 simply adds consumer protection to the functions of the SFGB. The notion of consumer protection is implicit in the other functions set out in the Bill, but the amendment gives it statutory life. In doing this, it allows a broader definition of the reach of the SFGB. It widens its remit to something closer to the real-world situation for consumers and enables it to deal more comprehensively with the dangers and risks that consumers face.

Pensions guidance, debt advice and money guidance are all aimed at doing this, of course, but there are related areas where intervention would be of direct benefit: cold calling is one. One effect of Amendment 1 would be to allow cold calling to be dealt with in the Bill. We have discussed cold calling many times during the passage of the Bill and on many other occasions in this House. On several occasions I have described it as an omnipresent menace—and no one has disagreed. It is clear that there is a firm and widely held dislike of and dissatisfaction with cold calling, extending well beyond this Chamber. It is not only a thoroughgoing social nuisance; it is often a threat, directly and comprehensively, to consumers’ financial well-being. It is often an invitation—or more exactly, an inducement —to criminal activity.

The figures are remarkable and very alarming. There are now 2.6 million cold calls every month; that number has increased by 180% in the last 10 months. I noted that the Minister, when presented with these figures—and even larger ones—at an earlier stage in the debate, prayed in aid the ICO and the FCA. I am afraid that whatever the ICO is doing, and whatever the noble Baroness hopes the FCA might do at some unspecified time in the future, the problem is not only terrifyingly large but continuing to grow very rapidly.

On the fourth day of Committee, the noble Earl, Lord Kinnoull, made a very telling intervention; I am sure he will not mind me repeating it here. He quoted a Which? report from November 2016, which he described as detailing,

“the full horror of nuisance calls in the UK”.—[Official Report, 13/9/17; col. 2491.]

The report found that in 17 of the 18 cities surveyed, more than a third of all private phone calls were nuisance calls, and four in 10 people in the Scottish sample were intimidated by these calls. It is not easy to intimidate people in Scotland. In the same debate, the noble Earl, Lord Listowel, pointed out and emphasised the fact that many old people are particularly vulnerable to cold callers.

Then there is the successor to the whiplash scandal: the absolutely huge, and rising, number of claims for alleged holiday sickness. In July and August 2016 alone, one operator took 750,000 British, 800,000 German and 375,000 Scandinavian customers to Spain. The Scandinavians lodged 39 claims; the Germans lodged 114; but the British lodged around 4,000 claims for holiday sickness—essentially, food poisoning. That kind of thing not only costs our travel industry a huge amount and raises prices for everyone but directly encourages criminal acts on a large scale. As the noble Lord, Lord Deben, said in Committee, this a huge industry which,

“encourages fraud and leads people to do things which they would never have done without this pressure”.—[Official Report, 13/9/17; col. 2489.]

We already ban cold calling for mortgages. The Government have promised to ban cold calling for pensions eventually. We can ban cold calling for claims management companies later in the Bill via Amendment 42, but we should also be able to ban cold calling, if we choose, for debt management companies. Last week, the FCA announced its second inquiry into the rather murky debt management area.

In fact, wherever cold calling causes consumer detriment, or intolerable nuisance, we should be able to ban it. Ministers have occasionally appeared sympathetic to such bans as the Bill has progressed. Indeed, sometimes the noble Baroness, Lady Buscombe, has been quite passionate in her support for the principle. However, in every case, no matter their sympathy, they have told the House that there is a problem of scope. They have also talked rather vaguely about waiting for the next suitable legislative bus to come along, without so far giving any clue as to when that may be.

Amendment 2 is consequential. It is enabled by Amendment 1 and deals directly with cold calling. It requires the SFGB to make and publish an annual assessment of any consumer detriment. If the SFGB concludes that there are products and services where a ban on cold calling would be conducive to the exercise of its functions, including consumer protection, it must advise the Secretary of State to institute such bans. Since cold callers may be outside the jurisdiction, or revenants who go out of business to avoid penalties and then set up again, Amendment 2 also breaks the revenue chain for such people.

The advice from the SFGB to the Secretary of State must include a ban on the commercial use of data obtained by cold calling. In other words, if you cold-call illegally, we will probably catch you, and in any case you will not be able to sell or use any data collected illegally. New subsection (3C) proposed by the amendment would give the Secretary of State the power to make such bans. The result of all this is that it would no longer be necessary to wait for the legislative vehicle to come along to address the problem of cold calling. Amendment 2 provides all that is necessary. Using it, the Secretary of State could ban cold calling for pensions, for CMCs, for DMCs and for any other activity the SFGB considered warranted a ban. No further primary legislation would be needed.

We have grappled with the problem of cold calling for a very long time. While we have been grappling, the problem has grown hugely in size, as has its potential to do real damage. Since banning cold calling for mortgages we have not really made any progress, but technology has made enormous progress. It has made truly massive-scale cold calling not only possible but a reality in our society. I believe that there is a widespread conviction in Parliament and in the country that cold calling in general is an unacceptable and omnipresent social menace. There is a widespread and entirely justified belief that cold calling can and does have dangerous and damaging consequences, especially for the vulnerable. I believe that there is general agreement that, when it comes to whiplash and holiday sickness, cold calling draws otherwise law-abiding people into committing fraud. It is time to be able to call a halt to all this, which is what Amendments 1 and 2 would do.

Amendment 7 builds on this and continues the theme of consumer protection. As things stand, the SFGB will have no powers of enforcement, as its name suggests. It will not be able to deal directly with what it may see, or knows its clients see, as approaches that amount to malpractice, misrepresentation or harassment —nor with what it may see, or knows its clients see, as dishonest, unfair or unprofessional conduct by those supplying relevant financial services. This misses an opportunity and may allow consumer detriment to persist. Amendment 7 would address this. It acts as a part of carrying out the consumer protection function in Amendment 1, but it is not an attempt to enlarge the competence of the SFGB or to give it redress powers. It is an attempt to make use of the information that the SFGB acquires in the normal course of its work.

The amendment would simply require the SFGB to pass on to the FCA casework from consumers in two circumstances. The first is where the SFGB suspects inappropriate, misleading or harassing approaches for debt advice, debt management, pensions access and claims management. We know that such approaches exist. The second circumstance is where the SFGB suspects dishonest, unfair or unprofessional conduct by the suppliers of financial services within the SFGB’s ambit. We know that such conduct exists. It would be wrong to let information about such wrongdoing have no follow-up and no consequences.

That is not to say that the SFGB’s predecessor organisations have not passed on such suspicions to the FCA and perhaps to other regulators, but it is to say that the SFGB should have in statute an obligation to do so as part of its consumer protection function. The FCA is the obvious place for lodging such suspicions of wrongdoing. It is the regulator that is best equipped, best resourced and most experienced in dealing with these issues. That is simply what the amendment does; it establishes a statutory obligation for the SFGB to pass on to the FCA casework where it has suspicions of wrongdoing both in approaches to consumers and in subsequent service delivery. We know that both exist and that both are damaging to consumers. The amendment would help reduce that damage and help protect consumers.

Amendments 1, 2 and 7 are a package, all linked directly to the thread of consumer protection. I hope that the Government will see them that way and see their merits. I beg to move.