We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.Donate to our crowdfunder
My Lords, with this take note Motion my noble friend Lord Stevenson has made an important intervention and it is a timely reminder that we should be making progress on matters covered by the Act. Indeed, he has covered a lot of ground, so I can be brief—or briefish.
We are reminded that the decision to name the body the Money and Pensions Service through regulation was to minimise the risk that individuals and organisations might impersonate it prior to its launch. In the event, it seems that it would not have taken a team from Bletchley Park to get close to its actual name. Could the Minister say whether there have, in practice, been successful attempts to impersonate the body before today? To what extent is the juxtaposition of pensions and money guidance in the title considered sufficient to repel impersonators?
This is not just about a name. Getting the business infrastructure of the body in place should involve the making of transfer schemes under Schedules 1 and 2. Are these now complete? So far as its members are concerned, could the Minister confirm that the appropriate proportion of execs and non-execs has been secured for its governance? We do not have the benefit of an impact assessment, but we have an explanation of why not. Could we be told the key monetary amounts attached to these transfers?
We have been reminded of the Act’s key provisions, which were the establishment of a single financial guidance body with the objective, inter alia, of improving the ability of members of the public to make informed financial decisions. The strategic function of the body is the development and co-ordination of,
“a national strategy to improve … financial capability”,
and to improve,
“the provision of financial education to children and young people”.
A number of noble Lords focused on this aspect of the Act and its ambition. We debated this latter point at some length and the extent to which there was scope to use the national curriculum, which had less than full mandatory configuration. I think that we on the Financial Exclusion Committee were surprised by just what a small percentage of the total education infrastructure was subject to the mandatory national curriculum. I cannot remember the precise statistic, but it was less than half. Therefore, that mechanism could not be used effectively to undertake the education one would ideally want. Can the Minister say whether there has been any early planning to enhance the education of young people? It featured strongly in our debates.
There has already been delivery on some aspects of the Act, such as the banning of pensions cold calling, but for other key aspects it seems we have hardly got to first base. It may be a bit early, but can the Minister say anything about how effective the cold calling ban is proving? It is a vital power to stop the scammers. What are the key challenges in making it more effective?
The debt respite scheme, referred to extensively by my noble friend, is increasingly relevant to consumers. As we heard, StepChange, in its 2018 statistics yearbook covering personal debt, set out the scale of problem debt. I will not repeat it, but there was the staggering statistic that it had one new client every 48 seconds. As for the age profile, as we have heard, there is a continuing increase in the proportion of younger clients. Over half its clients or their partners are actually in work. Not surprisingly, a rising proportion of clients rent their homes. To focus on housing and its impact on spirals of debt is absolutely right. I recall from my time as a local councillor, going back a bit, when right to buy came in and people had a bright new shiny door for a little while, then they mortgaged the property again to have some improvements and then again to have an overseas holiday. They ended up homeless and back with the local authority. It is a very important area.
Council tax arrears feature at the top of the list of the bills that create household debt. There, we can put the blame squarely at the feet of the Government for changing the benefit rules and grinding down on local authority support for these matters.
Where are we on the debt respite scheme? I understand that the body, now the Money and Pensions Service, was established as a legal entity on
“The Secretary of State must, within three months of the establishment of”,
the Money and Pensions Service,
“seek advice … on the establishment of a debt respite scheme”.
The advice can cover a range of matters. Perhaps the Minister could say when advice has been sought and what was covered. I hope that my noble friend Lord Stevenson would have been on hand to provide some input.
One area that exercised us when considering the Bill was the requirement to refer members of pension schemes, personal and occupational, for appropriate pensions advice. We had long debates about where the balance between advice and compulsion should end. I think we reached a compromise. This was in circumstances where a transfer of any right was in contemplation and/or benefits were about be provided by the scheme. Under the arrangements we ended up with, the FCA is required to make general rules for trustees or managers in this regard. Has any progress has been made on this?
As for funding, which was raised by a couple of noble Lords, under Section 11 of the Act the Secretary of State may pay grants, make loans or other forms of financial assistance to meet expenditure to establish the Money and Pensions Service and to enable it to carry out its functions. Could the Minister say what has been provided by way of grants, loans or other forms of financial assistance so far? What has been notified to the FCA as required to be recovered? Finally, can the Minister say what to date is the position on delegation of functions to delivery partner organisations?
As might be apparent, we view this as an extremely important piece of legislation—I think we built on a consensus—and one on which we will at least have to have a watching brief.