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Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019 - Motion to Take Note

Part of the debate – in the House of Lords at 6:15 pm on 1st May 2019.

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Photo of Baroness Buscombe Baroness Buscombe The Parliamentary Under-Secretary of State for Work and Pensions 6:15 pm, 1st May 2019

My Lords, I very much welcome this debate. It has been very good, albeit short, and has covered a number of important issues. It is really timely to reflect on where we have come since the passing of the Financial Guidance and Claims Act. My memory has constantly been nudged while listing to noble Lords about many of the things we debated, often at length, particularly regarding education. I will do my best to respond to the questions that have been raised.

I will address some of the specific points in due course, but I start by thanking the noble Lord, Lord Stevenson, for moving this Motion. I will take this opportunity to provide your Lordships’ House with an overview of the newly named Money and Pensions Service, what it has done and what it plans to do.

As noble Lords will know, the Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019 were laid before this House on 4 March. These regulations came into force on 6 April and renamed the single financial guidance body, provided for in the Financial Guidance and Claims Act 2018, as the Money and Pensions Service. These regulations also made amendments to existing legislation, so that references to the Money Advice Service or the Pensions Advisory Service were either removed or replaced with the Money and Pensions Service.

The launch of the Money and Pensions Service’s new name and brand on 8 April is a very positive development that has been welcomed by experts in this field and by industry. The Department for Work and Pensions is especially pleased that the new name for the single financial guidance body has now been set in legislation. This will ensure that both the body itself and its customers are protected by the criminal power in the Act, which makes it an offence to impersonate the body. That was our key purpose in keeping the name back until after the Act was introduced. We now have safely in place this powerful deterrent to protect customers against fraudulent activity. The new name—the Money and Pensions Service—has been well received. It has been positively noted that references to “advice” and “advisory” no longer feature in the name, which was a particular concern raised by noble Lords during the passage of the Act.

I am pleased to say that work has continued apace since the body was established as a legal entity in early October 2018 on the appointment of the chair, Sir Hector Sants, the chief executive, John Govett, and their executive and non-executive teams. On 1 January, the body began delivery to the public of pensions guidance, money guidance and debt advice. It also took on its consumer protection function, and has since laid out its plans for the development of a national strategy to improve financial capability, an important issue that all noble Lords have touched on this evening.

We were clear during the passage of the Act that we wanted to deliver a seamless transition from the Money Advice Service, the Pensions Advisory Service and Pension Wise to a single organisation, the Money and Pensions Service—which we should call MAPS, as the noble Lord, Lord Stevenson, suggested. I am pleased to confirm that we successfully achieved this with no detriment to the customer. It is, however, important to remember that the new service is going through a period of transition. It is essential that we do not underestimate the scale of transformation it is undertaking. The service needs time to focus its energy and resources on a successful transition, while at the same time building towards its long-term strategy. This was well put by its chief executive, John Govett, who set out that his priority for the year ahead is to, “bring the three” previous,

“organisations into one, and re-focus their efforts to increase the number of people supported by the Money and Pensions Service each year”.

This is a laudable and important goal, but it will take time to get right. I noted particularly that the noble Lord, Lord McKenzie, like myself, is always impatient, and rightly so. However, we need to ensure that there are no unintended consequences of moving too quickly. Exceeding expectations and then finding that the body has forgotten to put things into play to support people and protect their finances would be a mistake.

The service will work closely with the Government throughout, particularly the Department for Work and Pensions and Her Majesty’s Treasury. I say to my noble friend Lady Neville-Rolfe that yes, I am pleased to report that we are working closely and well with our colleagues at Her Majesty’s Treasury. Part of getting it right is ensuring that the new service is responding in the right way to customers’ needs. That is why, at the Money and Pensions Service’s launch last month, it declared that its mission is to put the customer at the heart of everything it does. Its vision, as spelled out in its first business plan, is to ensure that everyone is,

“making the most of their money and pensions", and that it is improving financial wellbeing throughout people’s lifetimes and equipping, empowering and enabling individuals to make informed financial decisions with confidence.

I am pleased to inform noble Lords that as part of its transition to full service, MAPS has also announced that it will be undertaking a UK-wide programme of listening events. This is really important. During these events, the service will engage with a wide variety of individuals and organisations, including customers, levy payers, providers, consumer organisations, funders and commissioners and other stakeholders, who will help to frame the future strategy of the service. The insight from the listening phase will help to shape MAPS and its three-year corporate plan, which is due to be published in the autumn.

As well as these listening events, MAPS is starting to deliver on the commitment, set out in the Financial Guidance and Claims Act 2018, to gather evidence and develop trials for how to most effectively and more strongly nudge people to take pensions guidance prior to accessing their pension pot—something we debated at length during the passage of the Bill. This builds on the success of the Pension Wise service, which was set up in 2015 to help people understand the pension options available to them. In its first year, 61,000 Pension Wise guidance sessions were delivered. Last year, this had increased to 167,000 and this year MAPS aims to increase that number to 205,000. Building on this tremendous track record, we expect the new service to nudge people towards guidance earlier and to reach them before they start the pension access decision-making journey. This will ensure that consumers have what they need to make a more informed decision, including about taxes and benefits, and to avoid scams—an important issue that was raised by the noble Baroness, Lady Janke. To this end, we are working with MAPS to test with care what is practically feasible. I thank my noble friend Lady Neville-Rolfe for her suggestion of taking a longer look at websites and so on, to ensure that we are giving the right advice in a simple form, because a lot of this is about prevention as well as support.

The Government are also swiftly implementing their manifesto commitment to deliver a breathing space scheme. Her Majesty’s Treasury is drawing on the expertise of MAPS in the design of such a scheme—something crucially important and close to the hearts of myself and the noble Lord, Lord Stevenson—including seeking formal advice on specific areas, as required in the Act. The Government will continue to work closely alongside the body as the scheme is delivered. This close work between MAPS and the Treasury will both support the implementation of the scheme and, when it is introduced, enable MAPS to help people in problem debt in the most effective way possible.

Since the passage of the Financial Guidance and Claims Act 2018, the Government have published a policy proposal on all aspects of the breathing space scheme for consultation, proposing strong protections for debtors. The consultation closed in January and a government response to it, to be published shortly, will confirm the details of the scheme. As I have already mentioned, primary responsibility for this policy rests with the Treasury, which will be publishing the response shortly. As I have already said, we are working closely with it.

I am pleased to say that MAPS will be establishing an industry delivery group, bringing together the pensions industry, consumer organisations and others to implement pensions dashboards, including a non-commercial version. This has not been touched on this evening, but the Government will be introducing legislation in this area when parliamentary time allows.

I will now endeavour to address the outstanding points raised during the debate. Regarding the name, yes, as the noble Lord, Lord Stevenson, suggests, we are in a sense talking about two separate issues—how people operate and manage their money, and how they save. Time frames are different for managing debt and for saving for pensions, but we trust in MAPS to manage these realities.

Key to this debate has been the issue of problem debt. The Government have taken steps to support people who have fallen into problem debt, including providing access to high-quality, free-to-use debt advice. Public funding for debt advice in England has risen to £55.8 million in 2019-20, which will provide help with debts to over 560,000 people in 2019-20—an increase of 85,000 compared to 2018-19. MAPS is an important addition to this. I note the concern expressed by the noble Lord, Lord Stevenson, that those in problem debt include increasing numbers of young people and women. Yes, housing is an issue but that is a government priority across all departments, and we are very focused on all aspects of housing and its funding. It is very important to us.

With regard to references to StepChange, the noble Lord, Lord Stevenson, will know that I made a visit recently, which reminded me how each person with a debt problem has a different problem. This is not easy or straightforward. There is a growth in unsecured debt and I want to put on record how remarkable charities such as StepChange are in the work that they do. We will do everything we can to support them because it is really important that we have people who want to take the time to care for and help others at times of crisis. For some people, it is a real crisis but it is important to raise awareness in support of those who need advice. That is one of the key things that we are working on.

We are taking the Breathing Space scheme forward. As I said, the Treasury is currently consulting on this and MAPS will feed into that. I agree that beyond brilliant organisations such as StepChange, MAPS can help people to access sound advice early—the earlier the better. The consultation proposed that Breathing Space would offer protection on as wide a range of an individual’s personal debts as possible. The Government are continuing to work with expert stakeholders on this and intend to confirm their approach in the response to the consultation. The Treasury is consulting on government debt and my department is currently considering this aspect—the degree to which we cover government debt—but, as the noble Lord said, this will take time. The Government recognise the need to move quickly on debt respite and implementing the scheme, and have committed to laying regulations on Breathing Space by the end of 2019. The statutory debt repayment plan will be implemented over a longer period than the introduction of Breathing Space. Given its complexity, we have to get this right; I say this in response particularly to the noble Lord, Lord McKenzie.

I have another point on Breathing Space. As set out during the passage of the Act by the Economic Secretary to the Treasury, the Government will be laying regulations by the end of this year. We are working well with the Treasury.

I want to add something on what was referenced by my noble friend Lady Neville-Rolfe and the most reverend Primate the Archbishop of York, who spoke so passionately about debt. I could not agree more with him on every point he raised. One great thing we are doing with pensions, for example, is auto-enrolment, which I am proud to say is making a huge difference in raising people’s awareness and their understanding of pensions. Over 10 million people have enrolled since 2015, which of course includes a lot of young people, so we are really pleased with that progress. It is helping people to understand the importance of saving for the longer term and there has been such a positive response.

Another very important point raised by my noble friend Lady Neville-Rolfe, the noble Baroness, Lady Janke, and the most reverend Primate the Archbishop of York was about education. I particularly remember that we debated this at great length during the passage of the Bill and it is so important. MAPS is committed to improving the level of financial capability for all. It will be working on its national strategy to improve financial education for children and young people. MAPS is in the process of consulting on the development of a national strategy in this regard. I am really pleased to report that because, as some of us—certainly myself—might say, if only I had better understood the issues in relation to pensions when I was younger, I might be in a better place in that regard now.