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

Part of the debate – in the House of Lords at 6:00 pm on 24th October 2017.

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Photo of Lord Young of Cookham Lord Young of Cookham Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Cabinet Office) 6:00 pm, 24th October 2017

My Lords, in response to the comments of the noble Lord, Lord Stevenson, about the propulsion available to the co-pilot, it remains the same: the journey may be a little shorter and therefore the destination may be reached more quickly.

Amendments 9 and 10 tabled by the noble Lord, Lord Stevenson, would alter the strategic functional matters relating to financial education. I thank all those who have contributed to this debate for highlighting once again the important issue of financial education. We had a good debate on this issue in Committee and I believe we agreed on both sides that financial education is extremely important at all stages of life—a point made by the noble Baroness, Lady Kramer. A key role of the new body will be to improve people’s financial capability and help them make better financial decisions, and to identify any gaps that there may be at the moment in the provision of such advice and guidance.

The financial education element of the strategic function is targeting a specific area of need, which is to ensure that children and young people are supported at an early age on how to manage their finances, for example, by learning the benefits of budgeting and saving. More specifically, the new body will have a co-ordinating role to match funders with providers of financial education projects and initiatives aimed at children, and will ensure that these are targeted where evidence has shown them to be more effective. This falls within the wider strategic financial capability work of the body and should form part of the national strategy, which we expect it to deliver.

As I explained in Committee, the Money Advice Service has been undertaking that role. It is one aspect that respondents to the Government’s consultations have overwhelmingly agreed it is important for the new body to continue working on. MAS’s work under the financial capability strategy focuses specifically on improving people’s capability, which they need to make key decisions, such as those presented in this amendment. We expect the new body will carry forward and improve the work under the umbrella of the new SFGB. I stress that this does not mean that the new body will not be providing financial education for adults. As I have explained, this is a key role of the body in improving financial capability, as it is for MAS now. For example, MAS currently runs a pilot on adult numeracy with National Numeracy through the What Works Fund. Also, through the work with the Financial Advice Working Group, it is creating a simple portal for employers linking to the MAS website and exploring partnerships for helping employees with money management. Finally, through the financial capability strategy, MAS works with the National Association of Student Money Advisers to test and improve the model for financial education for younger adults. We expect the body to continue and build on work in this space.

Moving to the specific amendments, Amendment 9 would alter this function so that a strategy for the provision of financial education is extended to care leavers. I thank the noble Lord for raising this point. It was also an issue raised by the noble Earl, Lord Listowel, in Committee. As I highlighted to the noble Earl at that point, the Government agree and we expect the new body to consider further initiatives to support care leavers as well as other young people from marginalised backgrounds—for example, those leaving youth detention or those with learning difficulties.

As we heard from the noble Baroness, Lady Finlay, Amendment 11 refers to vulnerable people and I absolutely agree with her: care leavers are vulnerable people. I hope my noble friend will say a little more about how we plan to help vulnerable people, including care leavers, when we debate Amendment 11.

Amendment 10 would make provision specifically for adults contemplating difficult financial decisions, such as mortgages, pensions and vehicle finance plans. As I said in Committee in response to the amendment tabled by the noble Baroness, Lady Kramer, and the noble Lord, Lord Sharkey, this is the role of the SFGB as a whole as it delivers money and pension guidance and debt advice. Also, the strategic function under Clause 2(7)(a) already gives the body a specific responsibility to work to improve the,

“financial capability of members of the public”,

including in these areas. To give the new body a requirement to advise the Secretary of State on explicit issues, worthy as these may be, is unwise. The noble Lord, Lord Stevenson, said that one could either agree or disagree with the point I have just made. I happen to agree with it—he may disagree with it—but there are problems in focusing on specific issues. There are several topics that the body may wish to look into as part of its strategic function and choosing a few could risk limiting its ability to look more widely at the sector and have regard to emerging issues in the future. For those reasons, I hope the noble Lord will withdraw their amendment.