“(1) The Secretary of State must, within six months of the passing of this Act, lay before Parliament an assessment of the expected impact of the Act on vulnerable customers.

(2) For the purposes of this section, “vulnerable customers” means someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”—

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

With this it will be convenient to discuss

New clause 12—Impact of Act on people facing financial exclusion—

“(1) The independent person appointed under section 64(1) of this Act must carry out an assessment of the impact of this Act on the number of people facing financial exclusion.

(2) The independent person must, after 12 months of the passing of the Act—

(a) prepare a report on the review, and

(b) submit the report to the Minister.

(3) On receiving a report the Minister must—

(a) publish it, and

(b) lay a copy before Parliament.”

This new clause would look into the impact of the Act on people facing financial exclusion.

New clause 9 would require the Secretary of State to lay before Parliament, within six months of the Act’s passage, an assessment of its expected impact on vulnerable customers.

Concern has been expressed in written evidence about the Bill’s impact on disabled people. It is important to ensure that vulnerable people are not inadvertently harmed by the Bill. There was a discussion about vulnerable customers in oral evidence, with Daniel Cichocki and Eric Leenders both supporting the notion of an impact assessment while being concerned about the mental strain of being under suspicion. They said that the FCA is due to publish a thematic review on this imminently. We suggest that this strengthens the case for a comprehensive assessment by the Secretary of State.

We define “vulnerable customers” as those who due to their personal circumstances are especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care, per the definition used by the Financial Conduct Authority, with which the sector is familiar. New clause 9 is necessary because some of the people impacted by the Bill will be vulnerable, and some will be repaying money they acquired not through fraud but through overpayments resulting from DWP error. As we heard from UK Finance, banks have duties when they suspect that financial crime is taking place, and although such errors are obviously not financial crime committed by the person who holds the account into which the payments have been made, there is a risk that the Bill does not sit well with those existing duties on banks.

We need to ensure that communication with vulnerable bank customers is of a sufficient standard, particularly where the DWP is recovering funds in cases where customer is not at fault, because the group of people we are talking about is likely to have high levels of vulnerability. If the Minister will not accept the new clause, I would be grateful for an explanation of the reasons why and, importantly, how the Government intend to undertake monitoring, which we believe is important.

The Liberal Democrats’ new clause 12 would require an independent assessment of the impact of the Bill on people facing financial exclusion. I am interested in whether the Liberal Democrats have a particular individual or organisation in mind which they think would be appropriate to undertake such an assessment, but we do not have a difficulty with the principle of the new clause.

New clause 12 is about financial exclusion, as the hon. Member for South West Devon said. The Liberal Democrats’ concern is that, as this morning goes on, a number of safeguards are looking to be—for want of a better phrase—baked into the system by legislation, yet according to the Minister the only thing baked into the system is the involvement of human beings. That causes me, and I am sure other colleagues, concerns.

If an annual review were to take place of the Bill’s impact on people facing financial exclusion, conducted by the independent person appointed with the Minister publishing and sharing that with Parliament, we could ensure a level of transparency. While many of us would acknowledge that the Ministers in place at the moment are well-meaning individuals, who knows where we will be in 10 years’ time? This legislation needs to stand the test of time, so baking in these safeguards would be a positive way forward. I hope that the Minister will welcome that. I look forward to his comments.

I have a lot of sympathy with both new clauses. It is really important that we look closely, as we are mandated to do, at the impact of the Bill on the people whose examples have been raised throughout the debate. The Minister should answer the questions asked by hon. Members, and if the Government will not do what is proposed in the new clauses, he should say what the Government will do instead.

I begin with new clause 9, tabled by the hon. Member for South West Devon. I share her view that where the powers in the Bill are exercised, there should be a consideration of the vulnerabilities that customers may have, whether they be the customers of data holders such as banks or customers of Government —for example, DWP customers. However, I do not think that the new clause is necessary given the existing safeguards, oversight and reporting provisions in the Bill.

The Bill includes a number of protections for vulnerable people, including affordability considerations and protections for persons experiencing hardship, rights of review and appeal, and independent oversight. Those provisions have already been debated and considered by the Committee, so I will not labour the point, but I will comment on the provisions in the Bill for independent oversight, as they will play an important role here.

I remind the Committee that those carrying out independent oversight will report on whether the Government have used the correct powers appropriately and effectively, in compliance with relevant codes of practice and guidance, and whether the exercise of those functions has been correct, effective and appropriate. That, I am sure, will involve His Majesty’s inspectorate of constabulary and fire and rescue services considering, for example, whether the PSFA or the DWP, in their fraud investigations, have given appropriate consideration to customers’ vulnerability. Furthermore, I remind the Committee that supplementary documentation, including the explanatory notes, impact assessment and policy factsheets that accompany the Bill, outlines how further vulnerabilities will be considered in individual measures.

Throughout the provisions on these powers runs a principle that vulnerability will always be considered in the assessments before any action is taken. That might include, for example, considering vulnerabilities in the risk assessment undertaken before the use of the powers in the Bill relating to entry, search and seizure, and the consideration that must be given to affordability and beneficial interest before any direct deductions are made from bank accounts to recover debt. Due to the combination of robust safeguards, independent oversight and reporting mechanisms already in the Bill, I resist new clause 9.

I recognise the intent behind new clause 12, put forward by the hon. Member for Torbay, and I appreciate his advocacy for protecting individuals from financial exclusion. That is an important point. However, I am again confident that the reporting will not be necessary. DWP and the PSFA are working closely with stakeholders from the finance industry, including the Financial Conduct Authority, to ensure that no one is inadvertently or unintentionally excluded from access to financial services.

For example, in respect of the DWP’s eligibility verification measure, there is an important exemption in schedule 3 of the Bill that ensures that a bank or other financial institution that complies with an eligibility verification notice is exempted from specific disclosure obligations under the Proceeds of Crime Act 2002, sections 330 and 331. I say that in response to the point made by the hon. Member for South West Devon. The exemptions apply if the information is obtained solely as a result of the eligibility verification measure. They do not exempt individuals from their ongoing duty to report knowledge or suspicion of money laundering under the Proceeds of Crime Act that might arise independently of EVM. In practice, it means that under that exemption, banks are not required to report it when they have reasonable grounds for knowing or suspecting money laundering through a suspicious activity report, when that arises solely as a result of complying with a notice. Banks should not close or suspend any accounts, or debank anyone, solely in response to information obtained under that measure, because at the point that a bank complies with the notices, there is no presumption of wrongdoing. We heard from Mr Cichocki from UK Finance that it is an important exemption, and I very much agree.

The PSFA will align with the Government debt policy, as well as abide by the standards set out by the Government debt management function and the debt management vulnerability toolkit in respect of how to consider those who are at risk of financial exclusion. The PSFA continues to engage with the financial sector to develop mitigations against financial exclusion. With those protections, I am confident that the Bill contains the provisions necessary to protect individuals from financial exclusion. Therefore, do not think the reporting requirement would add additional value beyond the independent oversight and reporting already provided for in the Bill. I therefore also resist the proposed new clause 12.

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.