My Lords, the FCA’s financial promotion rules apply to regulated financial services and products, and cover all forms of financial promotion, including cold calling. On consumer credit, the FCA requires regulated firms that accept business from unregulated lead generators to take reasonable steps to ensure that the business operates in compliance with legal requirements. The Information Commissioner’s Office can also issue a penalty of up to £500,000 to any organisation that breaches the legal requirements around cold calling.
My Lords, 31 million adults say that they have been offered fee-charging debt management via cold calls and texts. When these calls are from intermediaries, as they usually are, they are not in fact regulated by the FCA. As a result, the callers are not obliged to tell of the existence of free debt management services, which would be the case if the calls came directly from the debt management companies. The FCA already bans cold-call selling of mortgages. Will the Government consider doing the same for payday loans and fee-charging debt management services?
My Lords, all debt management companies themselves are required to advise on free debt management options at their first contact with a potential customer, so even when lead generators are being used there should be no cases in which people sign up for advice without having been told about the free alternatives. That is the key requirement. The circumstances that led to the banning of cold calling on mortgages a number of years ago, around the right to buy, were very different from the broader considerations that apply more generally.
My Lords, does the Minister recollect that when the announcement was made that pensioners could withdraw their pension funds, I asked him if he was aware of the spectre of cold calls every day seeking to advise people. He advised me then that there was no need to worry. Does he now accept that what is happening today, yesterday and the next day is that dozens of phone calls are being made advising people how they may access their pension pot? If the practice goes unfettered, is he aware that thousands, if not hundreds of thousands, of people will lose out very badly? Is it not now time to regulate that sort of thing?
My Lords, the easiest way to ensure that people do not get that plethora of calls is for them to sign up to the Telephone Preference Service, which will mean that they do not get the bulk of calls coming in. As far as the potential mis-selling of pensions is concerned, the FCA has a very wide remit and toolkit to deal with any potential mis-selling, and I know that it is working very hard in this area.
Is my noble friend aware that there is something wrong with the Telephone Preference Service, in that numerous calls are made to, I suspect, every Member of your Lordships’ House from overseas, and even from the UK, extensively for financial products, and is it not time that Ofcom and the FCA sat down together, with the help of government, to try to tighten up this whole area?
My Lords, the regulation of cold calling is split between the FCA, the Information Commissioner’s Office and Ofcom. The Nuisance Calls Action Plan was issued by the Government earlier in the year, one of the key parts of which is to bring these components together and to work with equivalent bodies in other parts of the world from where people make cold calls. In addition, a consultation is currently under way, which recommends that it should be much easier in future for the Information Commissioner’s Office to take action and to enforce penalties against people who are breaking the rules.
My Lords, next week we will have our amendment to the Consumer Rights Bill to deal with nuisance calls. It would make it compulsory for every marketing call to reveal its number, either for blocking purposes or to enable action to be taken. Will the Minister ask his friends in BIS to support that amendment when it comes to the House next week?
I will definitely relay the noble Baroness’s request to my noble friends. As she will know from Committee on the Bill, a number of examples were given which made it less straightforward than she suggests, not least in terms of family members having access to calls being made from organisations such as helplines.
My Lords, I wonder if I could press the Minister again, particularly on payday loans. The recent report published by the Children’s Society, Playday not Payday, has highlighted the regulatory gap whereby payday loan companies can make unsolicited marketing calls, whereas, as we have heard, mortgage providers are not allowed to. That report showed that over 40% of people who have taken out payday loans are receiving on average more than one unsolicited phone call a day. Does the Minister not agree that the provisions that prevent the mortgage providers from making that sort of marketing approach really must now be brought in for the payday loan companies in order to protect those who are most vulnerable?
The very specific arguments that apply in respect of mortgages do not apply to payday loans. The key thing about payday loans at the moment is that the payday loan companies are being regulated for the first time, which is leading to a collapse in the number of payday loan companies, so that it is expected that we may end up with as few as four payday loan companies in operation at the end of this process. However, the FCA is undertaking an in-depth thematic review of the debt management sector to assess the quality of advice and the area mentioned by the right reverend Prelate. If it finds substantial evidence of consumer detriment of the kind he suggests, it will be able to consider the scope of further regulations.