Moved by Baroness Meacher
16: After Clause 40, insert the following new Clause—“Regulation of bailiffs and bailiff firms for the purpose of taking control of goodsIn section 22 of the Financial Services and Markets Act 2000 (regulated activities), after subsection (1B) insert—“(1C) An activity is a regulated activity for the purposes of this Act if it is an activity described by Part 3 of the Tribunal, Courts and Enforcement Act 2007 (enforcement by taking control of goods) performed as a service by way of business specified in an order that may include provisions in respect of—(a) defining the people, organisations and activities under Part 3 of the Tribunal, Courts and Enforcement Act 2007 which may or may not be regulated under this section;(b) delegating some or all of the functions of the FCA in respect of this regulated activity to another person or body, either existing or established by an order under this section;(c) setting out which parts of this Act may or may not apply in respect of activities regulated by this section;(d) making such supplemental provisions as necessary to carry out the functions of the regulator.(1D) If an order under subsection (1C) has not commenced within 2 years of the passing of the Financial Services Act 2021, an activity of the type described in subsection (1C) is to be a regulated activity notwithstanding the lack of an order under subsection (1C).””
My Lords, I thank the noble Baroness, Lady Morgan, the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Stevenson, for putting their names to this amendment and for their tremendous support throughout the discussions we have had since.
Perhaps, I should begin by reminding the House what this amendment is all about, although I do not intend to repeat what I said in Committee. For many years, I have been aware of grave concerns about the operations of some bailiffs and certain bailiff companies, and the appalling experiences of some vulnerable individuals when they find themselves in debt and need help to solve their problems. I recognise that the law must support creditors in order to recover money owed; however, there has been inadequate protection of vulnerable people in financial difficulty.
I think the Government recognise that the 2014 regulations have failed to incentivise affordable repayment and to ensure consistently fair treatment of people in vulnerable situations. The MoJ review of the bailiff issue, set up in 2018, was most welcome but we are now in 2021 and, sadly, the review has not yet reported. Amendment 16 seeks to break the impasse on this issue, and I pay tribute to the Centre for Social Justice and the enforcement oversight working group for the support they have provided.
It is a remarkable first that the leaders of the enforcement and debt advice sectors have come together as part of this group, with the CSJ, to design a new oversight body for the enforcement industry. This cross-sector initiative is an important and historic breakthrough, and the group has made significant progress in developing the principles, objectives and functions of the new body, the enforcement conduct authority.
Crucial to the effect of an enforcement industry regulator is some statutory underpinning, as I know the Minister knows we feel strongly. Our amendment is designed to focus minds and take forward that vital element. All sides agree on the importance of giving the body real authority and teeth. I want to thank the noble Lord, Lord Wolfson, his colleagues and the noble Lord, Lord True, for our helpful meetings, the second meeting in particular. I also thank the Treasury and the Ministry of Justice for their constructive response to this amendment, and their commitment to build on the good faith of the industry and the advice sector and to work with the group on independent regulation.
I know that Ministers welcome the EOWG’s initiative; however, we accept the Treasury’s view that the Financial Services Bill is not the ideal vehicle for this amendment. We have also heard concerns from Ministers about putting this body on a statutory footing. I want to address that important point in a moment, but first, I want to assure Ministers that I will not be taking the amendment forward at Third Reading. We have listened to concerns about the FCA backstop, and I would be very happy to for the Government to come forward with an alternative amendment, maybe to another Bill, that removes the offending article.
I would also like to reflect briefly on how this initiative fits with the progress the Government have made in Clause 34—on the debt respite scheme—in improving protections for people in financial difficulty. This House strongly welcomed the Government’s initiative in 2018 to lay the powers for breathing space in statute through the Financial Guidance and Claims Act. It will not have passed Ministers by that they were pleased to do this before the policy framework was fully worked out, which is what we want to happen in relation to the regulator.
Let me now turn to the vital need for statutory underpinning for a new regulator. We are now two and a half years into the Government’s review of bailiff regulation, and my hope is that our amendment will have helped to focus minds on an idea whose time has come. Colleagues from across the House and across the sector are strongly united in the view that the current situation is unacceptable. We also believe that the establishment of an enforcement industry regulator without any statutory underpinning would be totally inadequate. I want to set out the reasons why statutory underpinning is so important for this industry. The enforcement industry itself is saying that statutory underpinning is essential, which should surely be sufficient proof of the veracity of this crucial point. The whole point of this initiative is to constrain the activity of offending bailiffs and bailiff companies and improve practices to a universally high standard. The EOWG has recognised that this will be much hindered without statutory oversight. Any new regulator will lack the necessary powers to achieve effective regulation without this statutory support.
I appreciate that time has been short for Ministers to consider the initiative for this Bill, but I urge the Government to reflect on what industry leaders are saying and think again. The powers to enforce firms’ compliance with regulatory standards and to sanction firms and agents who are in breach of the standards—or prohibit them from operating—are essential to protect the public from the inappropriate practices we still see. Without statutory underpinning, the independent authority of any new enforcement industry regulator threatens to be undermined. Funding for the body; access to intelligence; acceptance of standards and decisions: these all continue to be heavily dependent on voluntary consent and compliance, which is very difficult to achieve in this industry. Ministers may say, “Let’s see how voluntary regulation works”—in fact, I think that is what they are saying. I am afraid that argument does not hold water, for the reasons I have set out.
Finally, it is worth noting the strong precedent for statutory underpinning in the Ministry of Justice and Treasury spheres. To take one example, the Legal Services Act 2007 provided for the Legal Services Board to oversee approved regulators and established an independent complaints body. Given the extraordinary and necessarily intrusive powers of the enforcement sector, there is an overwhelming case for a regulator backed by statute.
To conclude, this amendment would put in place the necessary framework for the Government to make a real breakthrough to resolve a long-standing issue. The amendment has cross-sector, cross-party support; this has nothing to do with politics. All sides agree that any new body requires statutory underpinning to be effective. It is crucial that this moment of opportunity is not squandered, and I really mean a moment of opportunity. Leaders of the industry may change in a few years and we would have lost that opportunity.
I have no wish to test the will of the House on my amendment. We have listened to Ministers about having a more palliative legislative option. The Police, Crime, Sentencing and Courts Bill is coming down the track and we believe that it may offer a more suitable vehicle for reform of the enforcement industry regulatory system. However, I hope that the Minister, in winding up, will assure the House that the Treasury and the Ministry of Justice will work together with the EOWG on the necessary statutory underpinning for an enforcement industry regulator. I ask Ministers to commit now to using the PCSC Bill to build on the talks we have had on this Bill and returning to the House with their own amendment on this issue. I know colleagues will listen to the remarks of the Minister very carefully before deciding whether any further Back-Bench parliamentary involvement is needed. I beg to move.
My Lords, I congratulate my noble friend the Minister on Amendment 14, as I raised that issue at Second Reading and it was very good to see it today. It shows that the Government are listening, which is very welcome. I thank him for his kind opening remarks on a number of Peers’ appearances: it was very perceptive of him. I will not repeat the sorry tale that he heard last time around, which is the reason for this amendment. He will recall that it was in response to an attempt to commit a fraud by sending me a credit card I had not requested, and that I was unable to progress matters with FOS because I was not a customer of the credit card company concerned. I had a letter from FOS, which says the following:
“The Financial Ombudsman Service must follow the rules stipulated by the Financial Conduct Authority handbook. The relevant section concerns dispute resolution—DISP—and DISP states that there are limitations to when FOS may investigate a complaint.”
This is the rule that stipulates that FOS may look at complaints only from “an eligible complainant”, and DISP 2.7.3 states:
“An eligible complainant must be a person that is … a consumer”.
The regulations go on to say that FOS may investigate a complaint from a consumer or “a potential consumer”, and that this consumer or potential consumer must have a relationship with the regulated busines. There is a full explanation set out in DISP 2.7.3 and 2.7.6 of the FCA handbook. As I did not genuinely attempt to make a credit application, I did not fit the description of consumer or potential consumer in the handbook. In his reply to me at Second Reading, the Minister said that
“it is already the case that potential customers of a firm can seek redress through the FOS scheme under the FCA’s existing rules, notably the FCA dispute resolution handbook rule. The relevant rule states that, to be an eligible complainant, a consumer must be, or have previously been, a potential customer, payment service user or electronic money holder of the firm that they are raising a complaint against”.—[
This is completely contrary to the email sent by FOS, and there is clearly misunderstanding and confusion.
My noble friend the Minister was kind enough to suggest that I could report this matter to Action Fraud, and reports received by Action Fraud are then considered by the National Fraud Intelligence Bureau. Frankly, none of that need have been necessary or would be necessary in future if my Amendment 26, the only amendment I will speak to, were adopted. I seek for it to be adopted so that, from here on in, FOS can take action against credit card companies which do not seek to verify recipients of credit cards before they are sent out. At the moment, there is no redress for anyone who receives a credit card and no one for them to complain to. I do not think they can complain to Action Fraud because the fraud was never consummated, as it were. I very much look forward to listening to his remarks at the Dispatch Box later this afternoon, given that the Government are in listening and action mode.
My Lords, I shall speak to Amendment 16 and then address my own Amendment 27. The introduction of a regulatory body to oversee the rules governing the behaviour of bailiffs would greatly strengthen complaints handling for the victims of practices that fall outside the national guidelines. The FCA reported in its Financial Lives 2020 Survey that 3.8 million people in the UK are currently experiencing “financial difficulty”. It is a terrible situation that takes a significant toll on people’s health and relationships. This amendment seeks to address an important concern: the fair treatment of people by enforcement agents who collect debts, often from vulnerable people who are in grave financial distress.
The absence of an independent regulator means that, when breaches of national standards occur, any complaints will be dealt with through the company or a trade association, before possibly being passed on to an ombudsman. This is an arduous process that prevents complaints from being adequately actioned. Furthermore, these national standards are not legally binding, which obscures the extent to which an individual can seek redress. No industry is exempt from poor practice. While most enforcement agents will probably abide by national standards, nevertheless we need to make sure that they are properly regulated.
Breaches do occur, and I will quote one example provided by the charity Christians Against Poverty of a single mother of two children. This woman was living under police protection and was a regular at a food bank, and her abusive former partner had taken out £20,000-worth of debt in her name. All of this was compounded by the fact that she was caring for her critically ill mother. When visited by a bailiff on account of a parking fine that had escalated, she attempted to contact CAP so that it could explain the situation to the bailiff. At this point the bailiff became intimidating, aggressive and threatening. That is a breach of rule 21 of the national guidelines, which states:
“Enforcement agents must not act in a threatening manner when visiting the debtor”.
We need to get a balance of powers that allows enforcement officers to undertake their tasks while also protecting debtors and ensuring they have significant mechanisms to air complaints impartially and without fear.
Debt charities are already reporting rising numbers of people in financial crisis and behind on household bills such as rent and council tax because of the Covid pandemic. Given the possible upturn in the number of individuals being referred to bailiffs in the near future, now is a suitable time to explore how we can introduce a regulatory body. I hope the Government will look closely at the content of this amendment and work to correct the current imbalance.
I now turn to Amendment 27 in my name. I am grateful to the noble Lord, Lord Sikka, and the noble Baroness, Lady Bennett of Manor Castle, who have also signed it. I tabled this amendment because I believe in the positive difference that gambling blockers can make in reducing gambling harms and empowering individuals to control their own addictions. The amendment would mandate the providers of debit and credit accounts to offer opt-in gambling blockers to block gambling transactions.
As things stand, gambling blockers have widened coverage over the past three years, currently reaching around 90% of current accounts and 40% of credit card accounts. This is an achievement in its own right and should be welcomed as a positive technological aid to reduce problem gambling. While there is a still a need to close that 10% in debit card coverage, the majority of which will come from smaller banks and building societies, it is of secondary concern to the far larger gap that exists in the credit account market, where 60% of accounts are not covered by blocking options.
In April 2020, the Gambling Commission banned the use of credit cards for gambling purposes, but this is only enforceable on licensed operators. The lack of gambling blockers on credit accounts is particularly problematic as it can provide a back door for individuals suffering from gambling-related harms to use credit cards on unlicensed sites. This undermines the Gambling Commission’s own rules and unfairly benefits unlicensed operators. Even more worryingly, this blind spot provides a direct avenue for the expansion of harmful and addictive behaviour, and the accumulation of gambling debt that would not ordinarily be allowed.
With the Government’s gambling review ongoing, the emphasis should be on preventing harm, and provisions for gambling blockers would be a welcome aid in achieving this goal. Admittedly, they are not perfect; they rely on accurate merchant categorisation codes to identify gambling transactions. But this should not discount the positive part they can play. Furthermore, through greater co-operation between account providers and payment processors, a robust and data-driven system of reporting could be developed to identify unlicensed operators hiding behind incorrect merchant categorisation codes to block future transactions. With no legal requirement to provide blockers and no obligation on payment processors to diligently review the merchant categorisation codes of unlicensed operators, gambling blockers will suffer from pitfalls that could be effectively remedied through either a legislative or regulatory approach.
There are also issues this amendment does not directly deal with but deserve highlighting. Due to the entirely optional provision of blockers, there are currently no minimum standards for functionality. This is an issue when it comes to the so-called “cooling-off” or “friction” period—the time between deactivating the blocker and once again being allowed to transact for gambling purposes. As a tool that assists those suffering from gambling addiction, the ability to activate and deactivate at will renders a blocker redundant.
Of the gambling blockers currently on offer, friction periods range from instant reactivation to 48 hours. The results offered by Monzo highlight the success of stricter cooling-off periods. Its blocker, with a 48-hour cooling-off period, block around 585,000 gambling transactions per month and is active on nearly 300,000 accounts. According to its data, once it is activated, fewer than 10% of customers deactivate it. Monzo, driven by its own success, has called upon the Government to mandate that banks provide blockers and would no doubt support this amendment. However, as I have shown, it is not merely their provision that renders them successful but their architecture. A minimum cooling-off period of 24 hours would make them far more effective tools to deal with addictions.
Finally, I will add that, in a data-driven world fuelled by digital payment systems rather than the cash we used in the past, individuals should have more autonomy over how they spend their money. Aside from their benefits in combating addiction and containing the unlicensed market, gambling blockers are an example of giving customers control over their own transactions. Actions and decisions are increasingly dictated by data that is controlled, analysed and dissected by global corporations and increasingly removed from the individual. Optional transaction blockers such as those related to gambling re-empower individuals and give them a stake in this new data-driven environment.
I thank the Government for their helpful work in encouraging the major banks to introduce gambling blockers—an endeavour that has been very successful in relation to debit cards. I know from discussions I have had with the Government that they see the benefits of blockers and continue to support a voluntary rollout. This is very encouraging and I hope that as they move forward with these efforts they will take on board some of the comments made here and find ways to promote greater data sharing between payment service providers and processors to tackle the unlicensed market. However, I remain of the opinion that for products as potentially harmful as gambling there should be not only a statutory obligation to provide opt-in blockers, as stated in this amendment, but minimum design requirements so that the positive results provided by Monzo can be emulated by other account providers.
I will speak to amendment 37C, in my name and that of the noble Lord, Lord Blunkett. It seeks to release child trust funds worth less than £5,000 held by children with learning disabilities, without the need to go through the daunting, lengthy and at times cumbersome Court of Protection process, while at the same time offering strict safeguards to prevent abuse.
Child trust funds were launched in January 2005, and 6.3 million children in the UK born between September 2002 and January 2011 were eligible to receive vouchers from the Government to invest in the scheme. Families with children who had a disability were offered additional payments to make it more attractive for them to join the scheme and to compensate them for the additional costs that they would face.
Unfortunately, no consideration was given to what would happen to any of those children if they lacked the mental capacity to manage their finances when they turned 18. I understand from Ministers at the time that this was an oversight in the original design of the savings scheme. The noble Lord, Lord Blunkett, said, on
“I had the privilege 20 years ago of initiating the research on, and then working with the Chancellor of the Exchequer to set up, the child trust fund. We never envisaged at that time that this situation would arise.”—[Official Report, 3/12/20; col. 827.]
When I raised this issue in your Lordships’ House on
“My Lords, the present situation is absolutely unfortunate.”—[Official Report, 11/2/21; col. 479.]
One of the problems is that this does not seem to have been anticipated by the Government who put child trust funds into existence.
I should say at this point that I am grateful to my noble friend Lord Wolfson for his sympathetic approach to this issue and for his informal advice and guidance, and to my noble friend Lord True, who has had to deal with my representations today.
In a nutshell, my amendment seeks to deal with the oversight that I have just referred to. Sixteen years later, as these funds mature, there is still no specific process to deal with the holders of child trust funds who lack mental capacity. Even in the 115 pages of the latest version of HMRC guidance notes for the child trust fund, last updated in January last year, there is no mention of learning-disabled children.
In April 2005, less than four months after the launch of the child trust fund, the Mental Capacity Act received Royal Assent and introduced the current version of the Court of Protection legislation and processes. This means that tens of thousands of children with a learning disability and a child trust fund now face the full force of a property and affairs application to the Court of Protection. For most disabled children, the child trust fund is likely to be their only financial asset and it will have a modest value. The finance industry reports that the average fund value is just over £2,000. Applying the full court process in such circumstances is unnecessarily burdensome and wholly disproportionate for families already facing many challenges to support a severely disabled child.
What do they have to go through? The current property and affairs application process means that parents will first have to familiarise themselves with the court processes and read 10 pages of guidance contained within multiple documents. They must then make an important decision about whether to apply for a full deputyship or a one-off decision from the court. In any scenario, they will need to complete a minimum of four forms—five if they wish to apply for a fee remission, a concession introduced by the Government in December, which I welcome.
That paperwork involves printing out 47 pages of information, completing 106 sections and submitting a minimum of 46 pages of hard-copy information to the court. From start to finish it will take up days of their time, rather than hours. A registered specialist such as a medical practitioner, psychologist or mental health professional must provide six pages of detailed information. Since Covid-19, some GPs are now refusing to complete the court forms, and most charge for the service, with prices ranging from £100 to £350 if an independent assessor is required.
They then have to apply to the Court of Protection. Back in September, the Court of Protection stated that applications could take up to 24 weeks for approval to be granted. Online legal discussion forums are now suggesting that the process could take eight months or more. After getting approval, they are then beholden to the Court of Protection in respect of an annual supervision fee, possibly an annual deputy bond fee and completion of an annual report, and then, when funds run out, must apply to the court to bring the deputy appointment to an end.
It is difficult to estimate the precise number of young people impacted by this situation. Estimates range from 78,000 to 161,000 teenagers. The same applies to the junior ISA scheme that replaced the child trust fund in 2011. That could potentially increase the numbers to over 200,000 in the next 10 years.
The Court of Protection is also likely to see a significant rise in the number of property and affairs applications. Even using the lower estimate of the number of disabled children impacted by the situation, the workload increase on the court could be as high as 40%, with annual applications rising from 21,000 to around 30,000. For parents with a child who has a life-limiting condition the current court process means that, tragically, it is easier and cheaper to wait until their child dies and to then access the money using the small estates process. That is the harsh reality that many parents face. It is a situation clearly not supporting the best interests of the disabled child.
Several legal firms are trying to win business off the back of this issue, promoting themselves as businesses that can help families unlock their child trust fund for a fee proportionate to their savings. This advertising is not sinister or unusual, but many families will find the court process daunting and will be tempted by these offers. Using a solicitor will exponentially increase legal costs, remove an opportunity for a refund of court fees and further diminish the benefit of the child’s savings. This is where we are heading without a solution. There has to be a change.
As I mentioned when I last raised this issue in March, in nearly all these cases the child will be eligible for disability payments from the DWP and the parent will be the appointee. As such, the parent will be handling much higher sums than those likely to be in the child trust fund without having to go through the Court of Protection process.
In March, I mentioned Hollie Squire, who requires 24-hour care. Her mother Tammie is managing the £605 a month that Holly gets from the DWP. And so I asked the question: if Tammie can be trusted with this money from the taxpayer, why can she not be trusted with Hollie’s money from her own trust fund without complex and time-consuming court procedures? The answer given by my noble friend was this:
“I can assure Tammie and Hollie Squire that it is not a question of trust. It is, I am afraid, a question of law.”—[Official Report, 25/3/21; col. 956.]
He went on to say that the legal position is governed by the Mental Capacity Act. In a further reply on the same date, my noble friend said that amending primary legislation is not likely to be quick or easy. But at the time, neither he nor I realised that this Financial Services Bill was a potential vehicle for remedying the problem, and I am grateful to the Public Bill Office for its guidance on this.
It is frustrating that, despite the matter being raised three times in this House and many times in another place, little progress has been made. The Ministry of Justice announced in December the creation of a working group to further explore the possible solutions for families, but so far nothing positive appears to have come out of its deliberations. A number of financial institutions have made life easier for these children by devising their own processes for releasing these funds without involving the Court of Protection. However, there is some doubt about the legality of this, Ministers have refused to recommend it and it is unsatisfactory as it leads to a lottery.
That is the background to my amendment, which builds on a recommendation by the Law Commission in 1995 that there should be a small-sums exemption from the Court of Protection. The case for this amendment was made in its report:
“It was agreed by the great majority of our consultees that there was a pressing need for a simple and inexpensive scheme allowing small sums of money to be realised without the disproportionate expense and formality of a judicial process. Support came from representatives of both sides of the question; from the banking, insurance and building societies’ associations and from individuals and organisations who work with informal carers. We were told of many instances where access to a small sum of money which could be put to very good use cannot be gained without undue delay and legal costs. Some of the larger building societies already release funds to carers on a contractual basis, and they confirmed that such arrangements can work well for all concerned. We have refined our provisional proposals in the light of helpful comments on points of detail.”
The Law Commission suggested £2,000 a year for a maximum of two years. Revaluing that figure would lead to a higher sum than that in my amendment of £5,000.
I have made two changes to the Law Commission’s recommendations which should make it easier for the Government to accept them. First, it applies only to child trust funds and ISAs, on which the Minister has already said the position is “absolutely unfortunate”. Although the problem at the moment exists for child trust funds, the amendment also applies to junior ISAs. Following the reforms in 2015, CTFs can be switched into ISAs pre maturity. As my noble friend the Minister said:
“My Lords, at the moment I do not see any conceptual distinction between child trust funds and junior ISAs. What we put in place to solve this problem ought, in principle, to be applicable to junior ISAs as well.”—[Official Report, 11/2/21; col. 479.]
The Law Commission recommended a wider application, but I have narrowed it. Secondly, there is a sunset clause of two years, which gives adequate time for parents to apply to the Court of Protection before the child is 18 and for the court to come up with a more streamlined procedure.
The amendment includes the Law Commission’s safeguards to prevent abuse. If the Government have issues with my amendment, there is time to put it right, as the Bill will have to return to another place because of amendments already carried.
So what should we do? The Government have said that the current position is “absolutely unfortunate”. Without action, it will get worse as more child trust funds mature. The Government have said that without legislation, they cannot interfere with the rules procedure of the Court of Protection, and in the eight months since “Channel 4 News” brought this problem to our attention, the Court of Protection has not responded. The working group announced by the MoJ has produced no results and the frustration and pressure for reform have understandably grown. Here we have a Bill, to reach the statute book in days, with an amendment that implements a Law Commission recommendation to deal with the problem. What are we waiting for?
I look forward to my noble friend’s reply. I do not want to press the matter to a Division, but a lot will depend on my noble friend’s response.
My Lords, I refer to my interests as set out in the register. We have heard some very powerful cases for other amendments in this group, but I will confine my remarks to supporting Amendment 27. I am grateful to the right reverend Prelate for tabling it.
As the chair of Peers for Gambling Reform and a previous member of your Lordships’ Select Committee on gambling, I have spoken to dozens of people who have been affected by problem gambling. We know that there are at least a third of a million problem gamblers in the UK—probably far more. We know that, on average, very sadly, there is one gambling-related suicide every single day. We know that for every problem gambler, six other people are adversely affected by gambling-related harm, which causes huge problems for families, individuals and society, as well as huge costs to society through lost tax receipts, welfare and benefit claims and costs to the NHS and the criminal justice system. With the growth of online gambling, unless action is taken, the problems will get even worse.
I am therefore enormously supportive of the Government’s decision to conduct a review into the Gambling Act 2005, but we should never forget that, while gambling companies have no incentive to drive customers to financial ruin, they have every incentive to keep them gambling even when problems are looming. The greater the problem, the greater the profit to the gambling company.
When people with gambling problems seek to address their addiction, we should do all we can to support them. One of the most crucial tools available to them, as we heard from the right reverend Prelate, is gambling-blocking software. While self-exclusion schemes such as Gamban and GAMSTOP are effective in preventing access to gambling sites, albeit only to those sites registered with the services, bank-based gambling blocks are a much clearer and more effective method of preventing gambling transactions and therefore better supporting those suffering from gambling-related harms and seeking to help themselves.
Recently published research from the University of Bristol entitled A Blueprint for Bank Card Gambling Blockers shows that bank-blocker mechanisms, as described in the amendment, offer great potential in helping people to control their gambling. This has been demonstrated by many customers of account providers who already provide such an option. The research from Bristol University made five recommendations: first, blocker technology should be made available digitally, by phone or in writing and, ideally, to a single point regardless of the account provider; secondly, all account providers should routinely raise awareness about blocker technology; thirdly, every blocker should be built around a time-release lock, as the right reverend Prelate suggested, of 48 hours, preventing impulse relapses from people suffering from a gambling addiction —this cool-down period would give users time to assess the implications of their request to bypass the block; fourthly, each blocker should allow limitations on cash withdrawals to prevent cash being used as a workaround for any gambling block; finally and most crucially, any form of blocking system, if it is going to be watertight, needs all account providers to be involved, not just those who choose to introduce such a system.
It was for this reason that a coalition of banks, campaigners and clinicians, led by Monzo, recently wrote to DCMS urging it to introduce a new requirement for all account providers in the UK to make sure every consumer can access a gambling block. This is the essence of Amendment 27, as outlined by the right reverend Prelate. I, too, wrote to the Secretary of State about this issue. On his behalf, John Whittingdale MP, Minister of State for Media and Data, who is now heading up the gambling review, replied just a few days ago. He correctly pointed out that NatWest Group has now joined the account providers which already have done so by introducing a 48-hour gambling block on its debit card and most Santander UK customers have been moved to Mastercard, which also has a gambling block. This is welcome news, and it means that a high percentage of customers have access to one form of gambling block or another.
However, crucially, not all customers have that option. Equally, not all schemes have the same degree of effectiveness. John Whittingdale’s response continued by saying that, “Of course further progress can be made to increase the effectiveness of gambling blocks and I hope that banks continue to strengthen these tools, as we have seen in recent months. Last week, I discussed this issue with the Economic Secretary to the Treasury, John Glen MP, and we are looking to banks to help customers manage their gambling”.
Surely the best way of achieving the desired outcome of ensuring that all account providers have strong, effective gambling blocks in place is not by encouragement but by the Government adopting the amendment or their own version of it. I hope we will get an encouraging response from the Minister. I look forward to hearing it.
My Lords, I should like to speak first to Amendment 26, to which I have added my name, which was so excellently and comprehensively spoken to by my noble friend Lord Leigh. I support its aims and thank the Minister, my noble friend Lord True, who has spent time engaging with us on this matter. I urge the Minister to look carefully at the arguments laid before your Lordships this afternoon so well by my noble friend Lord Leigh.
There perhaps seems to be some confusion in the interpretation of “potential consumer”, because it would appear that in the FCA handbook there is a definition of that term. It gives the impression that potential consumers are covered and can complain to the Financial Ombudsman Service. However, as always, looking a little further along at the so-called small print, those potential customers must already have a relationship with the provider under complaint. In the case that was explained by my noble friend Lord Leigh, a speculative offer of a credit card does not constitute any relationship between, in this case, my noble friend and the consumer credit card company.
Nevertheless, we need to protect the consumer here, and the Financial Ombudsman Service is designed to be able to look into such matters. The aim is not to give redress to someone who did not lose out because they managed to spot the problem but to ensure that redress is available to prevent other consumers falling for the same problem and that action can be taken against a firm in anticipation of future problems that will inevitably arise—because not everybody will be able to spot the problem that my noble friend discovered in advance of any issues arising.
The idea of reporting to Action Fraud sounds, in theory, attractive. However, Action Fraud tends to be an information-gathering service; it cannot introduce any reforms. If one were to say, “I am calling you about something but have not suffered any loss”, it is unlikely, given the number of scams going on and the scale of complaints often received, that the matter would get any further, and certainly not in any timely manner. I therefore hope that my noble friend Lord True might satisfy us with some promises on looking further into this matter and taking it seriously. The Financial Ombudsman Service clearly recognises that it does not have the required powers, and there may well need to be some changes to the FCA handbook or the regulations behind it.
I was very much impressed with the arguments made on two other amendments in this group by the noble Baroness, Lady Meacher, and the right reverend Prelate the Bishop of St Albans, who clearly explained the importance of Amendment 16 on bailiffs treating customers fairly, not being quite as aggressive and having some controls, and Amendment 27 on introducing gambling blockers to help people avoid the terrible problems of losses accrued by gambling and the impact that it has on society. I hope that my noble friend Lord True will listen sympathetically on those issues. Interestingly, they revolve around trying to redress the balance between financial services providers and consumers. All too often, the provider may have more power than the ordinary consumer, who may unwittingly or sometimes innocently be caught up in problems that providers have been too heavy-handed with.
Finally, I should like to speak strongly in support of Amendment 37C, again so excellently and comprehensively explained by my noble friend Lord Young of Cookham, which addresses an issue that is the opposite way round. In this instance, providers would like to help their customers—in particular, parents of children with disabilities—to access money that otherwise would stay with that provider. The law is preventing that from happening in any timely fashion. We have an opportunity in this Bill to redress that problem, which has only just arisen and which, as my noble friend explained, was an oversight in the original legislation.
I was involved in some of the discussions on the introduction of the child trust fund, which aimed to help children have a capital sum by the time they reached age 18. All children born after
Perhaps I may add a further example to that which was given by my noble friend Lord Young of Cookham. It is from a father called Andrew, whose son Mikey turned 18 last September and has a life-limiting condition. Andrew explains:
“We started saving money in his Child Trust Fund before we were aware that accessing it in the future would be a problem. We were encouraged and incentivised by the government to invest in a Child Trust Fund.”
The parents wanted,
“to use the money in the Child Trust Fund to purchase equipment and fund life experiences for Mikey, however, we cannot access the funds…Our time with Mikey is precious and we should not be having to spend time on this type of legal activity just to access money that ultimately belongs to Mikey.”
That sums up the problem we face.
I understand that we must be careful not to allow children with learning disabilities and disabled children to have money taken away from them under false pretences—there needs to be some protection. However, I pay tribute to my noble friend Lord Young, who has relentlessly pursued this issue time and again in your Lordships’ House through Oral and Written Questions, meetings and briefings. Perhaps my noble friend the Minister can give us some comfort that we might be able to introduce measures in the Bill such as those outlined in Amendment 37C—whether at Third Reading or in another place when the Bill goes back.
This would potentially be considered a financial application, and there are significant delays at the Court of Protection, which has understandably prioritised applications in favour of health and welfare. The problems facing the parents of these children need to be urgently addressed. Sadly, many of them have little time left with their children. This Financial Services Bill also has the support of the providers of these child trust funds. My noble friend is concerned about this issue and has generously given his time and expertise to try to help us understand the particular problems. He has suggested that the issue revolves around a legislative roadblock. If we can free up the roadblock within the Bill, we will be doing a great service to many disabled children.
My Lords, I support Amendment 16, in the name of my noble friend Lady Meacher and others, and I remind the House of my association with the debt advice charity the Money Advice Trust.
Anyone who has been involved with debt policy knows that the issue of bailiff regulation is a long-standing concern. Bailiffs have significant powers, including being able to enter people’s homes and take possession of their goods. Unfortunately, despite plenty of good intentions and existing voluntary national standards and codes of practice intended to govern bailiff behaviour, widespread problems remain in practice. These include bailiffs misrepresenting their powers, the failure to offer affordable repayment plans, and unfair treatment of vulnerable people or people in vulnerable circumstances. As my noble friend Lady Meacher has outlined, independent oversight would be an enormous step forward in helping people in debt to cope with, manage and overcome their predicament without unnecessary and unjustifiable additional pressures.
Noble Lords will be aware of the promising discussions currently taking place between representatives of the debt advice sector and the enforcement industry, facilitated by the Centre for Social Justice, to explore the potential for an independent oversight body. The aim of such a body—which would be funded by the bailiff industry—would be to address these problems and to raise standards. For the first time, both the bailiff industry and the debt advice sector are agreed that, for such an oversight body to be effective in raising standards, it must have statutory underpinning.
The amendment in the name of my noble friend Lady Meacher and others provides an opportunity to do just this. Of course, there are challenges to the parliamentary timetable, and relevant Bills in which to include issues such as this can be few and far between. The perverse and worst-case scenario would be to have a fully developed and agreed proposal for an independent oversight body which could not be put in place because the Government did not have the necessary powers. If the Government miss the opportunity to take action in this Bill, meaningful change is likely to be delayed much longer, with harsh consequences for people in debt.
So would it not be better for the Government to be proactive now and to accept this amendment—or, at the very least, come back with a similar version of their own at Third Reading? We cannot escape the fact that, despite the welcome support that has been put in place, debt problems will increase as a result of the pandemic. More people may face the prospect of bailiffs at their door and it is only right that the industry is properly governed and regulated, as other debt collection companies are. The Government have previously stated that they want to see practice in this sector improved and regulation strengthened. This amendment gives them the opportunity to do so. I hope that the Minister will accept it, or commit to coming back at Third Reading with something just as good or better.
My Lords, this group of amendments contains issues of profound importance. It is not surprising, therefore, that our progress this afternoon has somewhat slowed. I can be blissfully short, because the noble Lord, Lord Young of Cookham, spelled out in his usual eloquent and detailed fashion why Amendment 37C should be taken very seriously and that a solution must be found to the challenge that he laid out. Like the noble Baroness, Lady Altmann, I pay tribute to the noble Lord for his dedication and commitment. I have been proud to work alongside him. One of the great pleasures of this House is that it is possible to work effectively—I hope effectively—across party. The case that he made this afternoon, which he has been making for the last few months, is in my view unanswerable. The issue, therefore, is what progress can be made and what can be done.
The noble Lord, Lord Wolfson, has taken this issue seriously and to heart since he joined the House and took up his present position. Forgive me if I call the noble Lord, Lord Young, my noble friend. As he has spelled out, it is surely not beyond the wit of woman or man—working groups that do not meet or address issues aside—to be able to unlock funds that are essential, albeit small, for those for whom they were intended. My noble friend kindly indicated my history in this area. It was blighted by not having spotted that the Mental Capacity Act, which succeeded the decision to introduce child trust funds, would inadvertently lead to those funds being blocked for the most vulnerable.
I still regret very strongly that the early part of the coalition Government abolished child trust funds—driven, it has to be said, by the then Chief Secretary and not by the leading party in the coalition. But that is water under the bridge. The paradox of course is that, had the child trust funds continued and been delivered in the way originally intended—including continuous top-up funding—we would have been in a more difficult position in releasing these funds for those with learning disabilities, because the funds would have been much greater. Sometimes there are twists in life which you do not see and sometimes there are those you wish you had not.
This is a simple issue here, whether it is about Holly who was highlighted by my noble friend Lord Young, or Mikey, highlighted by the noble Baroness, Lady Altmann. I originally heard Mikey’s father outlining these issues on “Money Box”. He was also mentioned by the now leader of the Liberal Democrats in the other place. Those young people demonstrate the wider issue of access to modest but important funding that can help them at a crucial time of transition into adulthood, as was originally intended. There is also the profound issue of the growing capital asset divide in our country. With house prices accelerating as they are now, this divide will increase still further.
So I will make a very simple appeal. The noble Lord who is leading on this amendment will not press it to a vote. However, I think that the feeling of this House—both on the numerous previous occasions on which the issue has been raised and again this afternoon by noble Lords both online and present in this Chamber —is that a solution must be found, and found quickly. My experience during eight years in the Cabinet was that there were very good civil servants who explained, quite rightly, why something could not be done. I always valued them because they prevented me putting my foot in it more often than I did. But the best civil servants were the ones who highlighted the problem and then came up with a solution.
My Lords, the noble Baroness, Lady Meacher, spoke powerfully in favour of her similar Amendment 136F in Committee on
There is a weight of evidence of unreasonably aggressive behaviour by enforcement agents even before the onset of the pandemic. Your Lordships should be pleased that the Ministry of Justice launched a call for evidence as part of its second review of the reforms introduced by the Taking Control of Goods (Fees) Regulations 2014. It is understandable that that review is taking longer than expected in current circumstances. My noble friend Lord True explained that resources had to be moved to bring about the passage of the Corporate Insolvency and Governance Act, which was intended to help businesses survive the lockdowns. I would be interested to hear from my noble friend the Minister whether the Act is working as the Government intended, and how many companies have successfully applied for moratoria under the Act.
As the noble Baroness explained, her amendment allows the FCA to outsource the powers it would assume under this amendment to another unspecified person or body. I think this is far from satisfactory, and that the FCA should not be burdened with responsibilities in this area. The FCA is going to be busy enough with its new regulatory responsibilities and with what will rightly be an onerous system of oversight by your Lordships’ House and another place.
The FCA is not the right regulator to become involved with issues relating to non-payment of utility bills, for example. I am surprised that the noble Baroness is apparently unwilling to accept the assurance of my noble friend that the Government’s response to the review of bailiff regulation will be issued within this year. I expect that the Government will recognise that something needs to be done to control overaggressive behaviour by bailiffs, balancing such control against the need to retain an effective enforcement process. In view of my noble friend’s assurance, I am unable to support this amendment.
However, the FCA is the right regulator to protect potential customers of regulated financial services firms as well as contracted customers. Every contracted customer is a potential customer before entering into a contract to purchase supplies from a supplier, or to purchase services from a supplier, and thereby becoming an actual customer. I therefore support Amendment 26 in the name my noble friends Lord Leigh of Hurley and Lady Altmann.
The right reverend Prelate the Bishop of St Albans has made a powerful case for his Amendment 27, requiring debit and credit card providers to offer an opt-in option for gambling blockers. Research by GambleAware published in July 2020 found that only eight financial services firms offered blockers on certain products and ranges, estimated to cover 60% of personal current accounts. The research also examined the effectiveness of blockers currently available and found that they needed to be improved. Of the eight banks that offered blockers, three banks’ blockers could be immediately turned on and off, meaning that they functioned more like a light switch than a lock. I would like to ask my noble friend the Minister whether he agrees with GambleAware’s recommendation that the FCA, in its guidance, should require banks to include gambling blockers as standard on debit and credit cards.
The FCA already recognises that all banks’ customers are capable of becoming vulnerable, but it does not recognise that those with a gambling addiction are included in the categories it already recognises, such as those who have a cognitive impairment, low resilience to financial shocks or poor numeracy skills. It is of course very difficult to define what is a gambling addiction, and it also begs the question of how far we want the state to go in protecting us from all the risks we may encounter in our lives. However, the right reverend Prelate’s amendment calls for an opt-in option and therefore has some merit. I look forward to hearing the Minister’s views.
As for Amendment 37C, in the names of my noble friend Lord Young of Cookham and the noble Lord, Lord Blunkett, I understand that the Government have announced that they will set up a working group to consider what they can do in future to make the process easier for families who need to apply to the Court of Protection to access a child trust fund or junior ISA. My noble friend Lady Altmann also claimed convincingly that something needs to be done, as did the noble Lord, Lord Blunkett.
The objective of the amendment seems sensible, and I am well aware that to go to the Court of Protection is cumbersome, time-consuming and expensive. However, I rather doubt that this Bill is the right place for this measure. I do not see that the FCA can be given any responsibility or power in this connection. I do agree that £5,000 in any year is a sensible amount, below which it should not be obligatory to apply to the court. If my noble friend the Minister considers that the Bill is not the right place for this, could he tell the House what the Government will be able to do to find a solution to this difficult problem?
My Lords, it is a great pleasure to participate in this Bill. I strongly support Amendment 27. In view of the passionate speeches by the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Foster, my contribution will be relatively short, as they have said almost everything that I wanted to say.
In this technological age, it cannot be very difficult for any provider of bank accounts, credit cards, debit cards, store cards and other electronic payment systems to offer customers an opportunity to block payments to certain providers of services. As has already been said, the blockers actually increase consumer choice. The blockers would be of enormous help, as has been said, to those addicted to gambling or other ruinous addictions—of course, gambling is not the only one. It would certainly help their families too, because it would safeguard the family budget, which then cannot simply disappear by the swipe of a card or the click of a computer key.
I would urge that such blockers should be a necessary condition of the authorisation to trade in financial services in the UK. Other regulators, such as the Gambling Commission, should also insist that anybody who is licensed provides such facilities. The blockers obviously would not prevent people from indulging in gambling and other ruinous addictions. Nevertheless, they would really help vulnerable people in our society and I completely support this amendment.
My Lords, it is a pleasure to take part in this group of amendments and I declare my interests as set out in the register. I will speak to a trio of amendments and I will endeavour to do it in a trice.
First, I very much support the intention behind Amendment 16. I ask my noble friend the Minister, over and above what is set out in the amendment, what reports the Government have received of bailiffs entering properties during the Covid period, both in breach of their guidance and the Covid regulations, and what action all relevant authorities will be taking in this respect.
Secondly, on Amendment 26, I very much support my noble friend Lord Leigh of Hurley, who set out the arguments perfectly and succinctly. Would my noble friend the Minister agree that there is clearly a loophole, and what will the Government do effectively to close said loophole?
Thirdly, and perhaps most importantly, I give full-throated support to Amendment 37C, so perfectly introduced by my noble friend Lord Young of Cookham. It seems one of those amendments where, for want of a small legislative change, a huge material difference could be made to so many people’s lives. It is a funds-releasing, anxiety-relieving amendment. I ask my noble friend the Minister: if not this amendment, will the Government bring forward one of their own at Third Reading? If not this Bill, what Bill?
My Lords, while sitting here listening to this debate, I could not help but get the feeling that there had been a drawing of lots in the Government Whips’ Office when they were preparing to take on these amendments and the noble Lord, Lord True, lost. All of the issues here are good and real issues. If these amendments were accepted and brought forward, they would probably make our lives that little bit better.
Before I bring my full attention to the amendment brought forward by the noble Lord, Lord Young, I will say that we deserve to hear at least about a plan of action to deal with all these issues. If the Minister cannot provide that now, giving some idea of when they will be considered is very important. They are real issues; please deal with them. That is what we are here for. The only justification for us being in this Chamber is to deal with them, so can we hear about that?
When the noble Lord, Lord Young, first raised the issue in his amendment, I said that he had put his finger on an absurdity. I have not changed my mind. I think that the noble Lord, Lord Blunkett, basically said that the cock-up school of history is alive and functioning. The rest of us who were in Parliament at the time and involved in those Bills take our share of the blame because we did not spot it either. Can we change this?
The noble Lord, Lord Young, made about half a dozen arguments in his speech for why the amendment should be accepted or acted on. The most convincing one was that, for a comparatively modest sum of, say, £3,000, you have about four or five days-worth of paperwork. That is paperwork that you might not be very good at and which you might have to repeat, over and again, to get the money out—and usually the person doing the paperwork to get the money to support the child put that money in the bank in the first place. This is beyond belief; it is Kafkaesque. Will the Minister make sure that the people who put the money in to support a child can take it out to do so? What method are the Government taking? The law does not allow it at the moment, but we change the law all the time—we are doing it now. Please can he give us a plan of action on this?
The noble Lord, Lord Young, said that he did not expect to vote on this. The ball is of course firmly in his court on this one, but, dependent on what the Minister says, I hope the noble Lord will decide whether that is the correct approach here. I know it will annoy the Whips if we have a vote on this, but if the Minister cannot give him something that is at least in some way positive, I will certainly herd my colleagues through to support it.
My Lords, I will speak to Amendment 37C in this group. I declare that I chair the National Mental Capacity Forum. I hold the noble Lords, Lord Young of Cookham and Lord Blunkett, in the highest esteem, and I am most grateful to the noble Lord, Lord Young, for the time he spent talking through my reservations about this amendment as drafted.
The discussions relating to child trust funds have come about through the best of motives: trying to ensure that money can be accessed easily when a fund matures if the person for whom the fund was established lacks the mental capacity to access it and manage their money. Around 55,000 funds matured monthly since last September. To date, about 7,000 of these are held by young adults aged 18 who lack mental capacity. Some 80% of these funds are for amounts of under £2,000. The Court of Protection processes may seem daunting to many parents and so, in trying to resolve this, a process has been developed by some but not all providers.
As the noble Lord, Lord Young, said, the amendment is modelled on the 1997 Law Commission report that was behind the original Mental Incapacity Bill—a Bill which did not proceed. That report suggested a small payment scheme, which was not progressed because there were concerns that it could be stretched more widely to cover other financial products and that it would not respect the requirement that there should be proper judicial authority to act on behalf of another person in handling their affairs if they have not been able to designate that authority themselves.
Following the important work of noble Lords on child trust funds, the Court of Protection has been looking at its rules processes and is due to meet shortly, on
However, there is a fundamental principle here. One person cannot access another adult’s money or possessions without their permission, or, if the person lacks capacity, can access funds only with legal authority. Although this money is called a child trust fund it is not accessible to the person until they turn 18—in other words, when they become in law an adult. That means that we are talking about somebody else accessing an adult’s money. The role of the Court of Protection is to ensure that the money accessed is limited to this fund and possibly other clearly identified funds that are the property of the 18 year-old, and to guard against misappropriation of the money.
Let us take the case of a child who has been hit by a car and sustained catastrophic head injuries. On turning 18, the trust fund money is there and there may also be a settlement for very large sums in compensation to provide for their future care. I do not see how this amendment, as drafted, would prevent larger sums than the trust fund being drawn in, and therefore how it could prevent larger sums of money being misappropriated and used by others for purposes other than the care of the person. The amendment would not restrict who can apply for this money as it does not specify that only parents or responsible carers can apply under the proposed scheme. Could cousins, siblings or others who pretend to have the person’s interests at heart access money?
Another difficulty is what happens if the person later regains some capacity. Take, for example, a person with a catastrophic head injury acquired at the age of 16 and who, with rehabilitation, may have regained enough mental capacity by the time they are 20 or 21 to be able to be involved in their own financial decisions, particularly over smaller sums of money.
Sadly, these instances that we have heard about and that have received press coverage should never have happened in the first place. In my role as chair of the National Mental Capacity Forum I have been working to raise issues around transition, highlighting the need for planning to happen when a young person is in their mid-teens, so that when they have reached the legal age of majority at 18, everything is in place to allow future decision-making to happen, with the oversight of the Court of Protection through a court-appointed deputy.
This amendment would affect Scotland and Northern Ireland, as well as England and Wales. Therefore, I wonder what discussions have happened with the devolved Governments over this amendment. Across the UK, young people, on turning 18, rightfully have access to their trust fund, currently under judicial oversight it they lack capacity.
At first sight, this amendment might seem to solve a problem and the sentiment behind it is commendable, but I am concerned that the principle of needing legal authority to access a person’s funds—a principle that was in place before the 2005 Mental Capacity Act and has not been eroded by it—should remain intact. This amendment is not supported by the Building Societies Association, UK Finance or the bank and building society child trust fund providers, which are represented in the child trust funds working group. The fast-track urgent process is in the Court of Protection and now, with no fee attached, it would seem a much safer way to manage these funds rather than to risk misappropriation.
I hope that the exceptional process suggested by some providers will be shared with the Court of Protection, so that their revised forms will inform revision of the Court of Protection forms to make them more user-friendly. We all hope that this is resolved with alacrity. Importantly, parents providing long-term care for their child or children with severe learning difficulties and other problems of capacity need to make long-term provision through a court-appointed deputyship or, if the person at 18 has adequate capacity, through being appointed with a relevant lasting power of attorney.
I fully accept that there is more work to do to prepare parents and young people for the transition to legal adulthood at the age of 18, but this amendment does not solve this problem of a failure of planning. Therefore, regretfully, I cannot support it.
My Lords, it is a great pleasure to follow the noble Baroness, Lady Finlay of Llandaff, and her—as always—expert contribution, which has made me think again about that amendment. I put my name down for this group chiefly to speak to Amendment 27, in the name of the right reverend Prelate the Bishop of St Albans, also signed by the noble Lord, Lord Sikka, and me. The reasons for this amendment have been broadly canvassed, notably by the noble Lord, Lord Foster of Bath, well known for Peers for Gambling Reform, which I was recently pleased to join. I do not feel that I need to make this case again, but there is a useful reflection to make—drawing also on what the noble Baroness, Lady Finlay, just said, and sharing the frustration of the noble Lord, Lord Addington—about how, in this group of apparently disparate amendments, we see a real problem in the nature of our lawmaking in the difficulty of making progress. What we have here, as we had earlier with the sharia-compliant student loan, are apparently small, easily fixed issues, on which some very expert, knowledgeable, extremely capable people have spent years working, without progress being made. This particularly applies to Amendment 16 in the name of the noble Baroness, Lady Meacher. Something clearly needs to be tackled and dealt with, and it looks simple; we need to see regulation, oversight and protection, but it is not happening.
In the interstices of what has been a rather hectic day for me, I was looking at the Law Society briefing for the National Security and Investment Bill, which is coming tomorrow. The Law Society does not have any party-political issues to raise on that, but it has looked at the Bill and has seen that we are creating huge problems. Somehow, our legislative process is not identifying issues. With commendable frankness, the noble Lord, Lord Blunkett, earlier identified his role on the issue that arises in Amendment 37C. Somehow, things are not coming together and delivering us workable laws. We need to think, as a House and as a society, about how we can end up getting more workable laws. I suggest that we need more co-operation, listening and input at the early stages, rather than a sudden decision by the Government to do something, which then results in a Bill.
We are not sure that there will be any votes on any of these amendments, but we clearly need action and I commend to your Lordships’ House the need for action on all of these, particularly Amendment 27, to protect vulnerable people.
My Lords, Amendment 37C is an issue of fundamental importance to young people who are disabled and have taken up child trust funds. The amendment before us is key. We had a thorough and competent speech from my noble friend Lord Young of Cookham, but I have just listened to another speech from the noble Baroness, Lady Finlay of Llandaff, and we have to find common ground between the two.
I declare a past interest as, when I joined the Commons in February 1974, I took an interest in the friendly society movement, which I continued until I left in 1997. I was then asked to become chairman, which I was from 1998 to 2005, of the Tunbridge Wells Equitable Friendly Society. That interest was declared at that point. In the days of the child trust fund, the Tunbridge Wells Equitable Friendly Society traded under the brand of the Children’s Mutual. It is my recollection that the Children’s Mutual was a brand leader, and we put a huge amount of effort into it. We liaised with the authorities involved at the time—not just the Government of the day but others. I am saddened and disappointed that, somehow or other, this issue got through the net. Unfortunately, the coalition Government tragically decided—George Osborne was one of the key players, of course—to wind it up. That was a great error, in my judgment.
We come to the current position, and I am pleased to hear the industry’s concerns, but I am disappointed that there has been no mention of the Association of Friendly Societies. I am sure that the majority of child trust funds were sold by the friendly societies, and I would advise those involved to make sure that the Association of Friendly Societies is involved now. On my own initiative, I will contact the Tunbridge Wells Equitable Friendly Society to suggest that it helps and is involved.
I am not sure why we have the same problem with junior ISAs. I declare an interest here, because I contribute to the junior ISAs of my four grandchildren, who are eligible. I am disappointed, although I was not involved in the legislation on junior ISAs in depth, that the same problem appears. I do not want to add to the concerns of my noble friend on the Front Bench, but, until recently, a large number of grandparents had been buying National Savings certificates, and I wonder whether the same problem is lying there and has not been raised by anybody else.
This is a serious problem. I have faith in my noble friend on the Front Bench, and I hope that he and those involved will look at it seriously. If there is anything that I can do to help resolve this issue, I will do my best to, because it is important.
My Lords, I shall speak to Amendment 16 and I thoroughly support its intent. I have been chair of the Enforcement Law Reform Group for more years than I care to remember, and for all that time I have been aware that every side of the industry wants statutory regulation. It is not a suitable case for voluntary regulation. You need the powers that go with being set up by statute to deal with all the difficulties and conflicts that are inherent in the business of getting money out of people who do not want to give it to you.
I fully understand the Government’s caution about the drafting of the amendment, but I very much hope that everyone involved in it will hold their feet to the fire to get a suitable alternative through as soon as possible. I have one piece of advice for the Government on the amendment as drafted. It is important that whatever we create can bite on creditors. A lot of the problems in this industry have their roots in the delinquency and bad behaviour of creditors and in the disorganisation of the systems that they operate. The privilege of being able to use a bailiff should be granted only to creditors who are well set up, who have done their preparatory work, who know who is vulnerable, who have found out the right addresses, who have properly offered payment holidays or plans before involving the very expensive, onerous and sometimes distressing option of a bailiff.
When we come to have this in statute, we need some way in which a local authority, for instance, which is trying to recover debt due on council tax must demonstrate that it has done what it should in order to be allowed to use the bailiff system. There may be some other way of doing it—but not to have that connection through to creditors and think that you can regulate just by putting pressure on bailiffs would be a considerable mistake and would, in the end, result in the system not working.
My Lords, I think my noble friend Lord Addington put his finger exactly on the problem here. These are a series of amendments, all of them good and strong, that tackle really significant issues that seem to affect a particular selection of our population who find themselves constantly recognised but pushed into the long grass, so that we do not get regulation of the underlying problem. I hope that today we can collectively as a House ginger up the Government to say that this really must be dealt with—not just given to working groups or consulted on yet again but put on a track to get resolution quickly.
On Amendment 16 in Grand Committee we discussed bailiffs and the need to improve their behaviour and get it within the right statutory context, so I will not add more, other than to say that with Covid and the consequences for so many people who will find themselves out of work or in debt, this becomes more urgent than ever. The noble Baroness, Lady Meacher, should know that, if she finds an appropriate vehicle, we would be very willing to support on this. It must be dealt with. It would be lovely if it were in the form of a government amendment, but somebody will have to move on this very quickly or a lot of people will be paying a sad price.
On Amendment 26, in the name of the noble Lord, Lord Leigh, sometimes a personal experience leads to identifying a real problem, and he has put his finger on another problem. If I were a regulator, I must say that anyone who could get my attention and show me that we are getting abuse and misbehaviour within the financial services sector ought to be welcomed. If the definition of eligible customers makes it difficult or impossible to use as broadly as it should be, a look at that definition is urgent. If I were the ombudsman or the FCA, I would certainly want to know that someone was out there attempting to scam the public. I can assure the Government that the scammers know all the loopholes and weaknesses in the definitions, so plugging them as rapidly as possible makes obvious sense.
Amendment 27, dealing with the issue of gambling, focuses on important and powerful tools to ensure that gamblers can restrict their own imprudent or addictive behaviour. It is an important amendment. I was looking, almost by chance, at a January study in Frontiers in Psychiatry, which had done a survey that demonstrates that gamblers are at greater risk of gambling harm as a consequence of Covid and lockdown, which have exacerbated well-established risk factors for disordered gambling: social isolation, lack of social support, boredom and financial insecurity. The severity of gambling problems also has a high correlation with depression and anxiety, which are very much associated with Covid and lockdown, so we have a very unfortunate vicious circle. If this is not exactly the right amendment, I hope that the Government will act, because it seems that a lot of people are particularly at risk both now and over the months to come.
When I saw Amendment 37C, I thought it must be a government amendment that had been handed to a friendly Peer, because it seemed to tackle an issue that is absolutely pertinent. I had no idea that something like 200,000 disabled youngsters will, when they turn 18, find it difficult, if not impossible to get the benefit of a child trust fund because their carers have such hurdles to cross to access those savings. Obviously, I take seriously everything that the noble Baroness, Lady Finlay, said, but I also know the noble Lord, Lord Young, well enough to know that he would be very able to recraft the amendment to deal with the primary issues that she mentioned. It seems to me that there are some natural safeguards because of the limits to small amounts of money, and other pertinent issues were raised to make sure that this is narrowly drafted to deal only with child trust funds, and junior ISAs could be accommodated. If he were minded to bring it back at Third Reading, if he does not get the assurances that he needs from the Government, I would be very willing to support it.
We have a long evening still ahead of us. As I said, this is a very useful group of amendments, and I hope the Government will take seriously the content of each of them and find a way to turn concern into action.
My Lords, the issues covered by this group are wide-ranging in nature but all important. Amendments 16 and 25 return to issues that we explored in Grand Committee, while the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Young of Cookham, have found interesting ways to bring important issues to our attention.
The noble Baroness, Lady Meacher, made a convincing case for the need to reform how bailiff activity is regulated. One interesting thing about the Covid-19 pandemic has been its ability to make us look at long-standing issues in a new light, and issues of personal debt are no exception to that. It is promising that both sides of the argument—bailiffs themselves and charities providing advice to those with problem debt—seem to agree on the need for change. This is not a common occurrence, and it provides an opportunity that I hope the Government will seize in the weeks and months ahead.
I know that my noble friend Lord Stevenson, working alongside the noble Baroness, Lady Meacher, has been pushing on this in the background in the hope that the Ministry of Justice can provide a more meaningful response than we had in Grand Committee. What we really need is for the department to identify an appropriate legislative vehicle for this matter. We very much hope that this will be signposted in the document promised for later this year.
Amendment 26 seeks to broaden the scope of the Financial Ombudsman Service to allow potential customers to submit complaints against financial services firms. This is a fair question to ask: clearly the noble Lord, Lord Leigh, is not satisfied with the previous answer to it. On day 1 of Report, we passed an amendment that would enable the FCA to impose on regulated financial services entities a statutory duty of care towards customers. We hope that, despite their misgivings, the Government take this forward, as we believe that new consumer-centric working practices could negate the need for a proportion of complaints to the ombudsman.
Amendment 27, tabled by the right reverend Prelate the Bishop of St Albans, is not only an impressive interpretation of scope, but raises important questions in relation to the tools available to those experiencing issues with problem gambling. Labour has previously been critical of the Government’s lack of urgency in launching reviews and introducing legislation and regulation. That process is now under way—indeed, I believe that the initial call for evidence has now closed. It is clear to all colleagues that the current regulatory regime has serious shortcomings. Without seeking to pre-empt the outcomes of the DCMS-led review, I hope that the Minister can demonstrate that the Government will take the right reverend Prelate’s suggestions on board.
Finally, Amendment 37C raises what looks to be an important issue in relation to certain payments made from child trust funds or junior ISAs on behalf of children with learning difficulties. I do not believe that we have touched on this issue previously, so I hope that the Minister will commit to a future discussion with the noble Lord, Lord Young of Cookham, and my noble friend Lord Blunkett.
My Lords, this has been a long and important debate, which I found to be of great interest. As many will know, I am not responsible for the grouping of amendments. That is not a matter for the Executive; it is a matter for the House. However, following on from the noble Lord, Lord Addington, I feel a little like the “MasterChef” hopeful who presents his dish to the judges and is told that there are too many things on the plate. There are different issues conjoined here: the important issue of the behaviour of bailiffs—as, being an old boy, I still call them—credit card applications, gambling protection and child trust funds in the case of incapacity. It is a diverse group of amendments, but they all relate to the protection and fair treatment of consumers and, as we have heard today, of the most vulnerable people in society. I will try to respond to each of them, but I am not certain that I will be able to satisfy every hope of everyone who has spoken. I hope, however, because I am confident from the discussions that I have had with colleagues in different departments—I come as an outsider to this—that I can assure your Lordships that my perception is that the Government are positively engaged on all these fronts and are listening, have listened and will listen.
Amendment 16, from the noble Baroness, Lady Meacher, and others, would commit the Government to making the activities of enforcement agents—also known as bailiffs—in relation to taking control of goods a regulated activity under the Financial Services and Markets Act 2000. The Government understand the importance of debts being enforced in a fair and proportionate manner. Since Committee, I have had the great advantage of speaking directly to the noble Baroness and others, including the noble Baroness, Lady Morgan, and the noble Lord, Lord Stevenson of Balmacara, along with my colleague, my noble friend Lord Wolfson from the Ministry of Justice, which is the department with responsibility for the regulation of enforcement agents. I know that my noble friend Lord Wolfson and the Minister of Justice have heard the arguments of noble Lords. I can reassure the House that the Ministry of Justice is currently reviewing the case for strengthening the regulation of the enforcement sector. As we have heard, that would be widely welcomed, as representatives from the enforcement and debt advice sectors have united to form a working group, led by the Centre for Social Justice, to consider how an independent oversight body could raise standards in the sector. The Government welcome this.
The Ministry of Justice recognises the important momentum of this development and looks forward to continuing to engage with the working group on its proposals for an enforcement conduct authority. The Ministry of Justice has also assured me that it would want to work closely with the working group to monitor the operation of the enforcement conduct authority and will review its operation within two years. At that point, it will consider whether there is a case for legislation to provide statutory underpinning to the body if necessary, as some noble Lords have argued. I stress that the Ministry of Justice will look to work with the enforcement authority as soon as it is established to assess what can be done to improve standards on the ground. It does not see the two years as a target: it would be willing to review the authority operation and consider legislation before the two years if necessary. I hope that that has reassured noble Lords that the Government take this offer from industry very seriously.
On the amendment itself, it would by default require the FCA to act as the regulator of enforcement agents unless its functions were delegated to another body within two years following the passage of this Bill. As I set out in Committee and in the valued exchanges that I have had with noble Lords involved, I think that there is now agreement—indeed, that has been expressed by the noble Baroness, Lady Meacher, and others—that the FCA would not be the right body for such a function. I must underline that the Government’s view on this will not change between now and Third Reading. We do not believe this Bill to be the right legislative vehicle for any changes to the regulation of enforcement agents. I hope that, having heard the assurances that I and my noble friend Lord Wolfson have given, noble Lords will withdraw the amendment and continue to engage with the Government as we go forward.
My noble friend Lord Trenchard asked about the use of the Corporate Insolvency and Governance Act moratorium to give UK companies a formal breathing place in which to pursue a restructuring plan in case of indebtedness. The power is working as intended. A handful of firms have already successfully applied to use the moratorium under the Act. As government support and regulatory easements come to an end, we expect the number of firms using the moratorium to increase. The new restructuring plan is also being used to good effect with Virgin Atlantic and other large firms using the new tool to recapitalise balance sheets.
Amendment 26 from my noble friend Lord Leigh of Hurley seeks to expand the jurisdiction of the Financial Ombudsman Service to include potential customers. I am grateful to my noble friend for his characteristic persistence on this important issue and I know that he is keen to make sure that the regulatory system ensures that others are not faced with the same potential risk of fraud that he experienced. As I sought to reassure noble Lords in Committee, it is already the case that both customers and potential customers of a firm can seek redress through the FOS scheme under the FCA’s existing rules, notably rules in the FCA dispute resolution handbook.
If we have understood the specific case correctly, my noble friend was the unfortunate victim of attempted fraud and did not intend to be a customer of the firm. He was therefore not a potential customer as defined by the relevant rules that cover people seeking to be a customer. As I said in Committee, I assure the House that had this incident led to financial loss or to my noble friend being pursued for a debt that was not his, he would have had recourse to the FOS and been supported by the current regulatory framework.
However, my noble friend was lucky to have intercepted the attempted fraud. In order to prevent harm to others, he has raised a valuable suggestion regarding ways in which financial services firms could protect customers against attempted fraud, namely that credit card companies should be obliged to verify potential customers and seek confirmation of their application before issuing their new card.
The FCA is responsible for setting rules on how firms should act when dealing with an application for a financial services product, and the FCA requires all authorised firms to have systems and controls in place to mitigate the risk of their being exploited to commit financial crime, as the noble Baroness, Lady Kramer, suggested. Any changes to these rules are the responsibility of the FCA, which also has a statutory duty to carry out a cost-benefit analysis and to consult ahead of making changes to its rules.
I am pleased to inform the House that since we last discussed the matter, senior Treasury officials have raised my noble friend’s case with Nikhil Rathi, the chief executive of the FCA. I can therefore assure him that the matter is in the knowledge of the FCA at the very highest level. I am grateful to my noble friend for raising this important issue and hope I have reassured him that his concerns have been brought to the attention of the FCA at that highest level, and therefore that he feels able to withdraw his amendment.
So many noble Lords spoke so eloquently and with such feeling on the next group of amendments, another important group, initiated by the right reverend Prelate the Bishop of St Albans. The Government recognise the value in voluntary gambling blocks to allow gamblers to self-exclude from making payments to gambling operators. This would add friction to the system to help gamblers manage their spending.
The UK banking sector has already made considerable progress in this area. Since an industry round table in February 2019, when the then DCMS Secretary of State set out the merits of these features, almost all the largest UK banks, as well as some of the digital challenger banks, have introduced voluntary gambling blocks for their debit cards. This represents a significant expansion of coverage, and access to gambling blocks is approaching approximately 90% of the current account market.
The Government also recognise the importance of cool-off periods to prevent these features being switched off immediately. Your Lordships’ Select Committee on the Social and Economic Impact of the Gambling Industry made a recommendation last year that cool-off periods on gambling blocks should be at least 48 hours. I am pleased to say that almost all the banks that provide gambling blocks now have this provision.
Regarding credit cards, licensed gambling operators in the UK are already prohibited from accepting credit card payments. On top of this, most of the major high-street banks already block credit card payments to gambling operators where they have the correct merchant categorisation code.
The right reverend Prelate quite reasonably asked about unlicensed operators. Unlicensed gambling operators are illegal, so they sometimes get around gambling blocks by pretending to be other types of merchant. Requiring a universal gambling block would not solve this problem. By the time a bank has realised it is making payments to an illegitimate operator, it is likely the Gambling Commission has already been made aware of the illegal operator and taken action to ensure it ceases operations. It is an issue on which we continue to reflect.
There is clearly already comprehensive market coverage of gambling blocks—already 90%, as I said—which means that customers who wish to use these features can either speak to their bank about how to access them or switch to an account that better suits their needs, so we do not see a case for this amendment.
However, I can say to the right reverend Prelate and other concerned noble Lords that the Government recognise that, despite the enormous amount achieved by the industry on a voluntary basis, it can go even further. That is why the Government will shortly write to UK Finance to organise a further ministerial round table with the sector in which we will talk about the action it has taken on gambling blocks and the concrete steps that can now be taken to go even further. This will include looking at the cooling-off periods that apply to blockers—that is, the ease and speed of turning them on and off. I hope that with that assurance, the right reverend Prelate will be able to withdraw his amendment.
I turn lastly to Amendment 37C, which brings novel material into the Bill at what is, frankly, quite a late stage. I recognise that it carries forward a campaign on which my noble friend Lord Young of Cookham and others spoke eloquently. The amendment seeks to give parents and others access to matured child trust funds and junior ISAs where an individual lacks mental capacity, without the form of legal authority required under the Mental Capacity Act 2005. The noble Lord, Lord Blunkett, also spoke eloquently on this point.
I begin by thanking my noble friend Lord Young for his focus on this topic. The Government are committed to supporting parents and carers in the most balanced and sensitive way. While I understand the intentions behind this amendment, we have real misgivings about this proposal, which is not compatible with the Mental Capacity Act. The Act upholds a long-established principle that legal authority is required to deal with the property of an adult who lacks mental capacity, through a lasting power of attorney or an order of the Court of Protection. This is a vital safeguard for the protection of vulnerable people and their assets; the noble Baroness, Lady Finlay, reminded us of that. We should not seek to bypass that Act in this Bill.
However, I assure noble Lords that the Government are working with financial institutions to ensure that parents and guardians are made aware in good time of the Mental Capacity Act and the possible need to make an early application to the Court of Protection. My noble friend made a strong argument about the appropriate balance between complexity and clarity. Having myself wrestled with the issue of long-term responsibility for a disabled person—sadly, lately deceased —I understand the motivation behind his remarks.
The Ministry of Justice is seeking to make the process of gaining legal authority as straightforward as possible. My noble friend Lord Wolfson, who is personally engaged with this matter, as my noble friend Lord Young knows, and whose commitment has been recognised by many in this House, has met the president of the Court of Protection to discuss it. While court forms are a matter for the judiciary, this item will, as the noble Baroness, Lady Finlay, said, be on the agenda at the next Court of Protection Rule Committee on
In December, moreover, the Government issued clarification of the guidance on court fees and child trust funds regarding the need to make an early application to the court and the availability of a fee remission. That means the vast majority of those applying to the Court of Protection will not have to pay a fee.
However, we do not think it possible to give this due consideration as an amendment to the Bill at this late stage. If the Government were to legislate on such an issue, it would be important to consult beforehand with the financial sector and others, including disability rights groups, and to consider the UK’s international legal obligations. Therefore, it is not possible for the Government to accept this amendment.
The amendment itself raises many concerns, as it extends far beyond giving parents and guardians access to matured child trust funds and junior ISAs and could enable third-party access to any bank or building society account. In addition, withdrawal amounts are high and the amendment does not address the circumstances, as the noble Baroness, Lady Finlay, pointed out, of an adult regaining capacity. I do not for a moment imagine that this is what my noble friend Lord Young of Cookham intended, but it demonstrates the need to consider this area carefully and in detail.
I repeat and give the assurance that this is a priority for the Government. At the Ministry of Justice, my noble friend Lord Wolfson—I have been present in meetings where he has engaged on these matters—continues to look at this and will carefully consider whether there is a need to legislate once all relevant issues have been fully considered. We have engaged further with the relevant stakeholders and my noble friend Lord Young of Cookham and others who are interested. We are not ruling anything out at this stage.
I hope that I have given my noble friend confidence that the Government do take this issue seriously but that this Financial Services Bill is not the right place to address it. Therefore, I hope that he will feel able to withdraw his amendment, and I also hope that I have managed to assure all those who spoke so eloquently to this important, persuasive and vital group of amendments that the Government do and will consider all these issues seriously, now and in the future.
My Lords, I thank my noble friend for stretching the constraints that we understand are forced on him as far as we could reasonably expect. I ask him, without trampling on the independence of the judiciary, to convey to the Court of Protection before the next meeting the strength of feeling on all sides of the House about the need to streamline, accelerate and simplify the process.
In not ruling out legislation, does he understand that, in the next Session, if I, and others who have been good enough to speak, believe that progress has not been sufficiently speedy, we will be back with the first possible legislative vehicle to press the issue again, having taken on board some of the reservations expressed during the course of this debate?
My Lords, I am confident that your Lordships’ Official Report is breakfast-time reading for every member of the Court of Protection, as indeed for every other citizen in this kingdom. I assure my noble friend that we will make sure that all those interested are made aware of the arguments that he and others have put before the upcoming meetings that have been referred to.
On going forward, I assure my noble friend that the Government will be happy to provide updates on progress on this matter to Parliament. We are very happy to continue the conversation with him, particularly on the issues that he has just raised.
My Lords, I thank the many noble Lords who spoke so powerfully in support of Amendment 16. I also note the powerful speeches in support of the other significant amendments in this group, as has been pointed out. I reassure the noble Viscount, Lord Trenchard, that, in fact, we are very clear that the Financial Services Authority is not the right vehicle to become the regulator for the enforcement industry—we made that very clear to Ministers in our meeting, as the Minister knows, and I tried to make that clear in my speech. I am also very grateful for his response to Amendment 16 and the other amendments in the group.
Of course, the Minister will not be surprised that the many people involved in Amendment 16 will continue to work with the noble Lord, Lord Wolfson, and others to try to achieve statutory underpinning for the enforcement regulator from the start because the industry regards this as absolutely essential. We will look to the PCSC Bill as a possible vehicle for that. On that basis, I beg leave to withdraw my amendment.
Amendment 16 withdrawn.