1: Insert the following new Clause—
(1) The objectives of the single financial guidance body are—
(a) to improve the ability of members of the public to make informed financial decisions,
(b) to support the provision of information, guidance and advice in areas where it is lacking,
(c) to secure that information, guidance and advice is provided to members of the public in the clearest and most cost-effective way (including having regard to information provided by other organisations),
(d) to ensure that information, guidance and advice is available to those most in need of it (and to allocate its resources accordingly), bearing in mind in particular the needs of people in vulnerable circumstances, and
(e) to work closely with the devolved authorities as regards the provision of information, guidance and advice to members of the public in Scotland, Wales and Northern Ireland.
(2) The single financial guidance body must have regard to its objectives when it exercises its functions.
(3) In this section “information, guidance and advice” means—
(a) information and guidance on matters relating to occupational and personal pensions,
(b) information and advice on debt, and
(c) information and guidance designed to enhance people’s understanding and knowledge of financial matters and their ability to manage their own financial affairs.”
My Lords, on Report I agreed to consider a range of matters concerning Clause 2, and I now make reference to government Amendments 1, 3 to 9, 12 to 13 and 32. During our debates on the Bill I think that we have all been in agreement that the provisions articulated in Clause 2 were important in setting the tone and ethos for how the single financial guidance body should operate. In the debates on Report, we discussed the need for these provisions to be well structured and clear. I believe that this group of amendments provides that clarity and structure. They tidy up the framework on which the body will progress towards achieving its objectives and assist it and all those with whom it will work closely in understanding our expectations in relation to its activities. I am extremely grateful for the enormous contribution that noble Lords have made to the Bill. Indeed, so significant has been that contribution that we have ended up with a rather long and unwieldy Clause 2, so for this reason we propose to split it into three separate clauses.
Government Amendments 1 and 6 remove the objectives from the end of Clause 2 and insert them as a separate clause immediately before the clause. This reordering picks up on the points made by the noble Lord, Lord Stevenson, that starting with functions and moving on to objectives was perhaps the wrong way around. I agree with him. Placing the body’s objectives upfront will emphasise and aid a wider public understanding of the overarching objectives of the body and how it carries out its functions. Government Amendment 8 divides the remaining provisions in Clause 2 into two. The first sets out the broad functions of the body and the second contains the specific cold calling provisions pertaining to the broad consumer protection function. It does not change the content of the cold calling provisions.
Setting out the detail of the body’s new consumer protection function in a separate clause is consistent with the approach we have taken in the Bill. For example, this is how we have, from the introduction of the Bill at Second Reading, treated the specific detail about pensions guidance, which is articulated in a separate clause after Clause 2. Alongside relocating the body’s objectives, this amendment simplifies what had become a very long and complex clause. The Government want the legislation for the single financial guidance body to be clear and to flow in a way that the people who will use it, including the body itself, are able to read and understand. On the whole, people will not have had the benefit of our debates in Parliament, at least not without considerable reference to Hansard. The easier the Bill is to read when coming to it for the first time, the better.
In addition, I have considered the case that was made well by the noble Baronesses, Lady Finlay, Lady Coussins and Lady Hollins, and the noble Lord, Lord McKenzie, about the need for clarity around access to financial guidance and awareness of financial services for people who find themselves in vulnerable circumstances. Again, I agree that we should be clear about the body supporting vulnerable people in exercising its functions. Government Amendment 1 therefore strengthens the body’s objective to ensure that its information, guidance and advice is available to those most in need of it, bearing in mind in particular the needs of people in vulnerable circumstances.
Moving on to government Amendment 3, as I indicated on Report, facilitating the bringing together of expertise to address the difficult and sometimes interrelated financial issues that people experience in terms of budgeting, savings, retirement planning and problem debt is a cornerstone of the policy for the single financial guidance body. We want to make it easier for people to access the help they need to make effective financial decisions. This amendment speaks to the concerns raised by the noble Lords, Lord McKenzie and Lord Stevenson, and places an obligation on the body and its delivery partners to consider all the financial guidance and debt advice needs of people accessing its services, and whether they would benefit from receiving other services that the body provides.
Government Amendments 4 and 5 make small changes to the strategic function of the body. They address points raised by several noble Lords during our debates in Committee about the lack of clarity around the body’s role in developing a national strategy to improve people’s financial capability and ability to manage debt. The strategic function currently requires the body to work with the financial services industry, the devolved authorities, and the public and voluntary sectors to support the development of a national strategy.
These amendments make it more evident that the single financial guidance body will lead on developing the strategy and that it will have some responsibility for overseeing the delivery of activities stemming from the strategy. I believe these amendments address the concerns about accountability that a number of noble Lords expressed.
Finally, Amendments 7, 9, 12, 13 and 32 are minor and technical in nature. Amendments 7, 12 and 13 are together a tidying-up measure. They remove the definition of devolved Administrations from Clauses 2 and 14 and insert the definition into Clause 19, “Interpretation of Part 1”. Amendment 9 corrects a technical defect in Clause 3(2), replacing the reference to the Pension Schemes Act 2015 with one to the relevant section of the Financial Services and Markets Act 2000. Amendment 32 allows for differential commencement by area. This is so that, in accordance with Cabinet Office guidelines, if it is necessary to commence at a later date for Northern Ireland there is a power to do so.
I trust and hope noble Lords will agree that these amendments provide sensible and pragmatic adjustments to the Bill, improving its structure and providing clarity. I beg to move.
My Lords, I welcome Amendment 1 and remind noble Lords of my interest as president of the Money Advice Trust. The amendment, in clarifying the single financial guidance body’s objectives, will ensure that its services are available to those most in need of them, specifically with the inclusion of the words in proposed new subsection (1)(d), “bearing in mind”, the particular,
“needs of people in vulnerable circumstances”.
As noble Lords heard during our debate on this on Report, there has been a great deal of progress in this area in the financial services industry in recent years, including through the work of the Financial Services Vulnerability Taskforce. It is very good to see that the SFGB should give similar prominence to vulnerability in its work. The explicit inclusion of “vulnerable circumstances” in Amendment 1 is an excellent example of this approach.
I offer my sincere thanks to the Minister for listening so carefully to what I and my noble friends Lady Finlay and Lady Hollins said on this matter at an earlier stage, and for agreeing to reflect this in the Bill. I am very pleased to support Amendment 1.
My Lords, I add my most sincere thanks to those of my noble friend Lady Coussins. This new clause is incredibly important. Yesterday, this was unanimously welcomed at the National Mental Capacity Forum leadership group, including by all those from the financial sector represented in the group, as being a very important way forward to make sure that our society is increasingly integrated and recognises the needs of those with permanent and transient impairments and incapacity, and those who may temporarily have been put in extremely vulnerable circumstances.
I also thank the Minister for the way she has listened and stayed in communication with us as the wording has been developed. It really was a very positive and constructive dialogue.
My Lords, as well as congratulating the Minister on bringing the language of “vulnerable circumstances” to the Bill, I want to congratulate the others who have made this issue so clear during our very positive and engaged debates; namely, the noble Baronesses, Lady Coussins, Lady Finlay and Lady Hollins. When the Minister first put down a slightly earlier draft of the amendment, which reordered some of the opening sections of Clause 2, because I am a naturally suspicious person, I tried to see whether there was some bear trap in there or something that I should be afraid of. I could find no such bear trap—and nor could my colleague, my noble friend Lord Sharkey, who I think now has a reputation for most incisive examination of language in a Bill. I fully understand the desire of the Government to be clear and transparent—they seem very positive. I shall have more to say about the Bill in later stages—but, with this first grouping, we start off on a rather good note for the opening of Third Reading.
My Lords, I congratulate my noble friend on the hard work done by her and the Bill team to include the changes called for in our earlier debates on the Bill. I fully support the reworking of the sections to improve the clarity of the Bill; the adjustments are sensible and pragmatic. I also add my congratulations to the noble Baronesses, Lady Finlay, Lady Hollins and Lady Coussins, on the important provision relating to vulnerable individuals. It is important that we have achieved that increased protection for them in the Bill. I again thank my noble friend and offer support for the amendment.
My Lords, I add my thanks and congratulations to all concerned in this area. We now have within the objectives the reference in paragraph (d) to,
“the needs of people in vulnerable circumstances”.
That is hugely relevant. As chair of the former Lords Select Committee on Financial Exclusion, I know that we spent a lot of our time looking at the problems faced by people in vulnerable circumstances. We focused particularly on the needs of people with mental health problems and disabilities and the vulnerable elderly. We received a lot of evidence on that point, and I know that many people will be very glad to see these words included.
My Lords, I add my congratulations; this has been a very good outcome. The Minister has done a splendid job in reflecting the concerns. The Bill is now much better as a result, and she deserves some of the credit for that. I am interested particularly in Amendment 3, because vulnerable people are now much better cared for. It will put more work, pressure and responsibility in the direction of the new body. I begin to wonder whether it will be expected realistically to carry the weight of some of these new, important duties with the financial envelope that we have—we will have time to discuss that afterwards—but the shape and framework that the body now has is a lot better for serving the needs of the most vulnerable and distressed.
I hope that consideration of people with vulnerabilities will also include signposting to the official social security benefits that exist so that they are taken up—universal credit will obviously increase take-up automatically, but a lot of other residual benefits still sit outside universal credit. Signposting under Amendment 3 would add value to having the power in the Bill. I look forward to seeing how this works out. It is a much better provision than was previously the case, and the Minister deserves credit for that.
I, too, thank the Minister and noble Lords for making significant progress. Perhaps I may ask for clarification: will care leavers be included in the “vulnerable” group? I apologise to your Lordships for being absent from Report—I was not able to be present—so I ask this question now.
There is no question: care leavers will be included in this group.
My Lords, I declare an interest as a member of the Financial Inclusion Commission and a former chair of StepChange, the debt charity. Before I get on to the nature of the amendments, which we support, I want to pick up on the tone that has already established itself around the House of a group of people with expertise and knowledge, willing to put aside any political differences they might have at the start of such a Bill, and with a fierce commitment to work together to improve what we have before us. We have just heard a series of short comments which are redolent of a much greater and more important truth: namely, that when the House does this, it really does it well. I am very grateful to all concerned who have been part of this. We are seeing today a Bill that has been transformed, not because of any particular line or argument in a political or wider sense but because people genuinely believed that there were things here that could be made better and that, as a result, the lives of people right around this country would be improved. I think it is very important that we hold on to that.
I thank the Minister, as everyone else has, for introducing this group of amendments which reorganise and expand the objectives and functions of the new single financial guidance body and set the tone for its future activities. We are pleased to support the group of amendments, as I said. It is important to get a sense of the journey we have been on: we made it clear at Second Reading that, while we agreed with the Bill, we thought it was a framework Bill and not a Bill that had the substantial and important powers that we thought were needed. We wanted to make sure that by the time it left your Lordships’ House it had been changed a lot—and of course it has.
As originally drafted, it was too narrowly focused on the near-term task of bolting together the three separate functions that were being brought together—debt advice, pensions guidance and financial capability—and on transferring the very important responsibility for claims management to the FCA. It was really short—a lot of people picked this up—on the vision that the body should have and what the sector was going to be in the medium term. It seemed to devalue the work on strategy that was so important and is now at the centre of the activities. The fact, as the noble Baroness said, that the original Clause 2 led on functions and only later referred to objectives meant that the Bill, I think unintentionally, gave the impression that the main purpose was the enactment of what would be simply a series of structural adjustments.
This, as we have been reminded, was at a time when the Government had decided to change the terms of trade in financial inclusion by creating a new Minister at the DWP, the department that is sponsoring the Bill, but had not set out clearly what they expected the Minister to do. We all agreed, I think, right around the House, that the Bill and the new functions of the SFGB would actually be about delivering a holistic financial inclusion policy. As we have already learned from its chair, the excellent Lords Select Committee that reported at about this time on a range of issues around financial inclusion made the case for extending the Bill to cover a number of specific proposals.
Towards the end of Report, when it was clear that the Bill had changed and was going to contain much more about the application of financial inclusion policies, as we will hear again later today, we suggested that Clause 2 should be revamped. What we wanted was a bit more of the longer-term vision that the SFGB should be aiming for, and we argued that putting the objectives first and then dealing with the functions at the new body’s disposal was a better way of doing that—and I think that splitting the original clause into separate groups is a concrete way of doing it. So we are very grateful to the Minister for seeing the merit of our arguments and we thank the Bill team for working very hard to get the new draft into shape. I have a reputation in your Lordships’ House for not being very good at drafting, so I was delighted when they agreed to take it away and bring it back in the form in which we now have it: it is so much better.
The noble Baronesses who spoke on the vulnerability issue did the House a great service by raising with great passion the need to make sure that the Bill, as well as generally describing the new body, focuses on vulnerable people. We are very grateful to see that amendment here today. With that, we support these amendments.
My Lords, I thank noble Lords for this short debate and for their support for this amendment. In reply to the question raised by the noble Lord, Lord Kirkwood, yes, we expect persons in vulnerable circumstances to be robustly signposted to UC and other benefits where appropriate.
Amendment 1 agreed.
Clause 2: Functions and objectives
2: Page 2, line 21, at end insert “, and
(b) advice to the Secretary of State on the establishment of a debt respite scheme (see section (Debt respite scheme: advice to the Secretary of State)).”
My Lords, I turn to the protection of indebted consumers, in particular the idea of providing a breathing space scheme, referred to in the amendment as a debt respite scheme. I thank noble Lords for their insightful and constructive contributions to previous debates on the subject.
I promised on Report that the Government would do further work on the issue in time for Third Reading. My officials and I have worked hard to produce an amendment that enables breathing space to be delivered quickly and effectively, a case for which noble Lords—in particular, the noble Lord, Lord Stevenson—put forward eloquent and powerful arguments. Indeed, the wording of the amendment builds on the amendment tabled by the noble Lord, to which the noble Lord, Lord Sharkey, and the noble Baroness, Lady Altmann, added their names on Report.
The best of your Lordships’ House has been on show in the development of the amendment. The way in which the Government and the Opposition have worked together to achieve consensus on a workable amendment which will enable the successful delivery of a breathing space scheme has been impressive, and it is my pleasure to introduce the amendment to your Lordships’ House. I know that there is broad agreement across your Lordships’ House that a breathing space scheme is both necessary and important. It has the potential to help thousands of vulnerable families out of problem debt, and provide a better life for individuals and their families.
I reassure the House that the Government remain strongly committed to the implementation of a breathing space scheme that is well designed and delivered at the earliest opportunity. We have already set out a clear timetable for developing the policy; the amendment provides the legislation that will allow us to implement it. Beyond enabling the introduction of a breathing space, the amendment contains many similarities with the one tabled by noble Lords on Report. For instance, it provides for details of the scheme to be set out once more detailed policy design has taken place. This is crucial, given that the Government are committed to listening to expert views put forward in the call for evidence. It also requires the Government to receive advice on the design of the scheme from the single financial guidance body, which will be important given the body’s expertise and central role in supporting indebted consumers. However, noble Lords may also notice a few differences from the amendment tabled on Report.
The noble Lord, Lord Stevenson, and I are in agreement that the Government’s amendment enables breathing space to be designed in a more effective way, building on, rather than duplicating, the work already commenced through the call for evidence, while still allowing for its introduction to take place swiftly.
I will outline a couple of the specific changes. First, the amendment enables the single financial guidance body to be involved in the design of the policy in a more suitable way. The Government plan to complete an extensive policy development and consultation process over the next year. As set out previously, we published a call for evidence last month on this topic, and intend to consult on a specific policy proposal in the first half of 2018. Through this process we will have established a robust blueprint of a breathing space scheme, informed by the expert views of the sector. Given this, we have agreed that it would not be the best use of the new body’s time and resources to require it to redo this work in its entirety once it is set up. Instead, our amendment would require the single financial guidance body to provide advice on specific issues requested by the Government.
The body must provide this advice within 12 months of its being established, which we expect to be in late 2018. On receipt of this advice, we will make regulations to set up the scheme as soon as is practicable—and certainly within 12 months of receiving the advice. This process will enable the body to supplement, rather than duplicate, the policy work the Government will have done up to that point. It could also speed up the introduction of the scheme, given that the advice is likely to be more targeted.
Secondly, we are in agreement that the amendment provides for more flexibility in designing the eventual scheme, potentially allowing for a scheme with a wider scope. For instance, our amendment enables—but does not mandate—the scheme to extend to Wales and Northern Ireland. We will assess the preferred geographic scope of the policy through our consultation, and the amendment allows us to deliver on the outcome of this process.
These are important changes, which we have reached a clear consensus on. However, after long and exhaustive discussions with House officials we have been informed that, for these changes to remain within scope of the Bill, we must take a power to make these regulations rather than a duty. I must be clear: in our view, this wording change has no practical impact. We have been clear, here and elsewhere, that we will deliver a breathing space scheme. This was a manifesto commitment and we are already midway through an intensive policy consultation process. This is simply a necessary step to give us the power we need to establish the scheme through this Bill. The Government’s position is clear. This amendment reflects the strength of our commitment to implementing a successful breathing space scheme. It sees the scheme delivered quickly and effectively and it ensures the sound design, implementation and operation of the scheme.
I turn to Amendment 33, tabled in the name of the noble Lord, Lord Sharkey. I begin by making it clear that this amendment is, with respect, neither necessary nor meaningful; it is actually entirely meaningless. As the House will have seen, the Government have tabled their own amendment to ensure that the Long Title of the Bill reflects the content following the additions made on Report. I must stress that my view remains that it is standard practice to add wording such as that tabled by the Government to the Long Title, and that it is perfectly adequate as tabled.
I also take this opportunity to remind noble Lords that the content of the Bill informs the Long Title; it is not the other way around. Indeed, the Companion to Standing Orders says that,
“amendments to the long title are not in order unless they are to rectify a mistake in the original title, to restate the title more clearly or to reflect amendments to the bill which are relevant to the bill but not covered by the former long title”.
Clearly, it is the third of these purposes which is relevant to this instance. Any amendment to the Title must therefore reflect amendments made, or being made, to the Bill. It is for this reason that we tabled an amendment to the Long Title to accompany the amendments that we tabled in respect of debt respite. The purpose is not to enlarge the scope of a Bill by amending the Long Title.
I am afraid that I must also express my disappointment that the noble Lord, Lord Sharkey, did not feel that he could discuss his original amendment, which he has now withdrawn, with me. Had he done so, I would have pointed out to him that I did not consider that it accurately reflected the contents of the Bill. His current amendment accurately reflects the content of the Bill so—in the spirit of consensus and because, as I have described, the amendment does not affect the scope of the Bill—I am prepared to accept it. On that basis, I shall not move Amendment 34 standing in my name and shall accept Amendment 33, tabled in the name of the noble Lord, Lord Sharkey.
My Lords, I thank the Minister for introducing the amendments in this group which, as she says, will primarily establish a much-needed statutory debt respite scheme. As she also said, it is necessary and important. We have signed some of the amendments in this group and are absolutely delighted to support their inclusion in the Bill.
The failure to include a breathing space in the Bill left a substantial gap in the services which the debt charities need, if they are to offer the best support to those struggling with unmanageable debt, so we have been pursuing it through the various stages of the Bill and challenging the Government to up their game and honour their manifesto commitment. Initially, I think it was clear to the whole House that the Minister was under strict instructions to agree to nothing. But it is to her considerable credit that, after listening to the arguments and consulting widely, she decided that the case had been made. She and her Bill team then went out to bat for the proposal and, from a standing start, secured support for the amendment from her government colleagues. Only those who have witnessed the turf wars that this sort of decision—to introduce a breathing space—must have precipitated can appreciate what has been going on in Whitehall over the last few weeks. I have seen that at close quarters and it is not a pretty sight. I therefore salute the hard work that the Minister and her team have put into this, and I am lost in admiration at their ability to persuade—at ridiculously short notice—her ministerial colleagues to back this amendment today.
The Minister said that the way in which the Government and the Opposition have worked together to achieve consensus on a workable amendment which will enable the successful delivery of a breathing space scheme has been impressive. I agree. Actually, it is true of the whole Bill. As I have already said, I hope it sets a standard for the way we could work in your Lordships’ House for the public good.
I know from personal experience that the campaign to introduce a breathing space scheme in England, Wales and Northern Ireland, which builds on the successful debt arrangement scheme in Scotland, has had a long gestation. It has been championed by StepChange, the debt charity, based on its direct knowledge of working in all the nations, including Scotland, and the idea has the support of many creditors as well as other charities involved in the debt space. I salute the excellent work done by these charities over the years.
The Minister drew attention to the many similarities that exist between her amendment, the amendment tabled by me and supported by other noble Lords on Report and the similar amendment laid, but now withdrawn, for this Third Reading. There is a story behind this, which need not detain us today. Suffice it to say that my colleagues and I have learned a great deal in the past few weeks about the rules governing the scope and admissibility of amendments to public Bills. However, having thought hard about what we could and should do and having listened to the Minister and heard her commitment to the introduction of the debt respite scheme as soon as is reasonably practicable, we concluded that the right thing to do would be to withdraw our version of the amendment and support the government amendment.
This joint amendment requires the single financial guidance body to provide advice on specific issues to do with the proposed debt respite scheme requested by the Government. The body must provide this advice within 12 months of being established. On receipt of this advice, the Government have committed to make regulations to set up the scheme as soon as reasonably practicable. Any significant delays will cause more hardship, and I am sure we all want to mitigate that as much as we can. We agree with the Government that it makes sense for the new single financial guidance body to supplement, rather than duplicate, the policy work the Government will have done up to that point, consequent on the ongoing consultation. We agree that this amendment provides for more flexibility in designing the scheme, potentially allowing for a scheme with a wider geographical scope. The people of Wales and Northern Ireland should also have the opportunity to benefit from the debt respite scheme, and this amendment provides for that.
Finally, I referred a few moments ago to the discussions that all parties have been having with House officials about what would, and what would not, be in scope of the Bill. I think the Minister also touched on this point. I observe, in passing, that there is an issue underlying this point which might with advantage be looked at by your Lordships’ Procedure Committee in due course. The Minister made a very important concession in respect of the amendment tabled by the noble Lord, Lord Sharkey, who is not in his place, and we should be grateful to her for that. I do not think this is the right way to make progress on issues of this type, and it is confusing to Members of the House who are not directly involved if we do not have better rules by which we can understand how things are admitted or not admitted to the legislation before us.
I shall return to the main argument. We back this amendment. I listened very carefully to what the Minister said about why the amendment grants a power to the Government to make regulations setting up the debt respite scheme rather than placing a duty on the SFGB to introduce the scheme, which was the approach we took in our amendments. We accept that placing the duty on the SFGB was not the ideal way to proceed for a body which would not otherwise have significant operational activities in this sector, but neither we nor the Government could find a way of getting that approach in scope. We therefore decided to seek assurances from the Government that they could use a lesser power to deliver a better scheme, and I think I have heard them today. I am very pleased to have heard the Minister confirm this afternoon that the new wording will deliver the debt respite scheme. I shall quote to her what she said earlier in this debate:
“We have been clear here and elsewhere that we will deliver a breathing space scheme .... This is simply a necessary step to give us the power we need to establish the scheme through this Bill”.
I believe that statement makes it crystal clear that the Government have the process in train and that Ministers have the necessary commitment and, under this Bill, will shortly have the powers they need to set up a debt respite scheme which matches the situation in Scotland, initially in England, and we hope across the rest of the United Kingdom. This debt respite scheme will ease the burden on families and their children and offer them the de jure protection they need to get their affairs in order without being threatened by their creditors. The creation of a statutory debt management plan will benefit hundreds of thousands of people who suffer from unmanageable debt. The powers created in this Bill will make a huge difference to the debt charities that work in this sector and have campaigned so long for the creation of this scheme.
The noble Baroness, Lady Buscombe, was kind enough to thank all sections of your Lordships’ House for their contributions to the earlier debates and for their support for this amendment. I endorse everything she said. I am delighted to have played a small part in the process of creating this legal framework and delivering the powers needed. What we want now is for the scheme to be designed and delivered quickly and effectively. Having listened to the Minister today, I place my trust in the Government to see this through as soon as reasonably practicable.
My Lords, my noble friend Lord Sharkey is unable to be with us at the moment because he is at the Economic Affairs Committee. I suspect that, by the time that committee finishes and he can come down and join us, we will have moved to the conclusion of Third Reading, so I am privileged to speak on his behalf, as it were.
I will talk for a moment about the debt respite scheme and then just say a few words about Amendment 33, which stands in my noble friend’s name and now has the added support of the noble Baroness, Lady Buscombe. The debt respite scheme is absolutely crucial and I congratulate all parties, including the Opposition Front Bench and the Government Front Bench, and the Bill team for working through all of this. This is my opportunity to say that the Bill team has been very open to discussion.
Like others, I recognise that this Bill is very different from the fairly narrow, technical Bill that was originally conceived. This House took on board the argument that many of the issues raised, particularly those around financial inclusion, cold calling and debt respite, were not party-political controversies. All signed up to those issues, and the only question was whether there would be other vehicles in the very near future to carry through those policies. We can all see that the works are getting more and more gummed up on a daily basis, and I suspect there is real relief on all sides now that important issues such as cold calling, debt respite and financial inclusion have found their way into this Bill so that action can be taken despite whatever may be happening at a national level on the broader policies, particularly with Brexit. That is a real win for everybody in the House, including the Government and also the Minister, who has turned a technical Bill into an opportunity to make a real impact on people’s lives.
On Amendment 33, which amends the Long Title, I will pick up the point that the Minister made when she introduced Amendment 1 and talked about the importance of clarity and transparency. To the general public, this Bill will not be noted because it brought together three very important bodies into a single body, although all of that matters and will itself breed quite a significant number of good outcomes; it will be remembered most because it gave the Government the power to deal with cold calling and the abuse from which much of the population suffer on a daily basis. As many noble Lords, including colleagues on the Cross Benches and the noble Viscount, Lord Trenchard, have said, the most vulnerable have been impacted most by cold-calling abuse.
The Bill will also be remembered because of the debt respite clauses. To have a Bill in which neither of those two issues appears anywhere in the Long Title would seem most peculiar to anybody trying to find the appropriate legislation tackling these issues. You would have to guess that they might be in a Bill with the more limited Title. The words “and for connected purposes” might mean a great deal to people in this House, but do not mean a great deal to people elsewhere. Making sure that the Long Title fully reflects the strengths of the Bill and that those strengths can be easily recognised is a real improvement. It will rebound very much to the Government’s advantage.
Most of our exchanges have been extremely gracious, so I hope that the Minister will feel able to overcome her irritation around this one last clause. We have worked well together as a House, which has been crucially important. As I say, our thanks go very much to the Bill team, which has been a crucial part of this. I pay particular tribute to my noble friend Lord Sharkey since he is not here and able to speak for himself. He, among a number of others in the House, has contributed to a very worthwhile piece of legislation.
My Lords, I add my praise to the two Front Benches. I should not think they could sustain much more joint praise, but on this occasion they have moved mountains in the length of time that this has taken. I emphasise how important the respite is from the point of view that every single case is a personal case of one family. It is not a matter of statistics, of speaking only of “30% of the families”; every single case that is allowed to go through this debt is a tragedy.
I say on behalf of Northern Ireland, if not the devolved parts of the UK, that it is good to see that it may be extended there, especially, from my point of view, to Northern Ireland. There are many individuals who, although they may not be listening to this, will unknowingly benefit from this to a tremendous extent. I thank all parties involved.
My Lords, I add my thanks to the Minister for her hard work and ingenuity in securing this amendment today. It has certainly moved a long way since our first discussion in Committee. She may remember that at the time I raised the issue of a particular care leaver who had a very stressful experience over two years because of the difficulties that we are addressing now. I am really grateful to her, particularly for care leavers who, after all, begin with a difficult start in their families, often have to experience independence very early in life and too often find themselves in financial difficulties. This will be particularly helpful for them. I appreciate the clarity that the Minister gave on the urgency with which the Government are moving forward on this, which was reassuring.
There is one point on which I would like clarification, and the Minister may care to write to me on this. Many care leavers are in difficulty around council tax. Some enlightened local authorities are now deciding not to charge care leavers but many still do so. When care leavers are pursued by their local authority for council tax, they can get into the position of the corporate parent aggressively pursuing their corporate child through the courts. I hope the dispensation will address that particular point.
One further point that the Minister may care to cover in correspondence: I believe that in Scotland the experience has been that six weeks may not be enough of a respite period to build a robust plan to go forward. I hope she might look at what is going on in Scotland and that we may build on that learning, perhaps looking at increasing the length of the respite period in light of the experience there.
I thank the Minister and all those noble Lords, particularly the noble Lord, Lord Stevenson of Balmacara, who took this forward, as well as the charity StepChange, which has been so helpful in all these matters.
My Lords, following on from the comments made by the noble Earl about Scotland, I hope the Minister will encourage dialogue with the authorities in Scotland that have some experience of running these schemes. I am not saying the system is perfect but it would appear a bit absurd not to take advantage of the opportunity, through ministerial joint committees and what have you, to learn as much as can be learned and extract information about the experience in Scotland. I hope that might benefit and expedite the formulation of the scheme in due course.
An important point that I would like the Minister to confirm is that the provisions of this new scheme, which I greatly welcome, apply also to public bodies, local authorities and housing associations. If it does not do that then it will not be as effective, so I hope consideration will be given to that question.
If everything that can go right does go right—if I may invite the Minister to be optimistic for a moment—how quickly does she think this could be done? I absolutely understand the commitment that she has made; she has made it clear that she is personally committed to the scheme, and I am sure she will do everything that she can to deliver it. However, we live in uncertain times, and it may be that she gets promoted on to further and better things and other Ministers come in. If that were the case, we might look to the new Minister for Financial Inclusion to continue her work.
By what milestones can we measure progress of implementation of the scheme? It is so easy for these things just to disappear slowly by desuetude and disinterest, and by the throng and press of other matters in the departmental in-tray for such things to slip considerably. Can she assure us on the efforts that will be made to ensure that it stays up to the best possible implementation timetable to get done quickly, and on what sanctions there would be if the single financial guidance body did not keep up to the timetable limits set in the Bill? We would be even more reassured that this is a useful scheme if we had some sense of how quickly it will be accessible to ordinary people in the United Kingdom.
My Lords, I shall be brief. I respond first to the noble Earl, Lord Listowel. I very much welcome the opportunity to write to him on his question about council tax for care leavers. On the scheme, I say to both the noble Earl and the noble Lord, Lord Kirkwood, that the Treasury has already issued a call for evidence. I attended a meeting at the Treasury with officials from Scotland, along with Treasury Ministers and officials to discuss how it works, what the processes have been and the path and history behind the debt respite scheme in Scotland. That is already under way.
Perhaps I should repeat one brief paragraph just to reassure the noble Lord. The single financial guidance body must provide advice within 12 months of being established, and on receipt of this advice, we will make regulations to set up the scheme as soon as is practicable, and certainly within 12 months of receiving the advice. It must be no later than 12 months, but we shall make every effort to do it as soon as we can.
I should also add that the scheme can apply to public debts, but we do not want to prejudge the consultation that we are progressing. A number of questions that the noble Lord raised rightly rest with the consultation process.
I intervene briefly to ask my noble friend for some gentle reassurance about the issue of cold calling. I am enormously grateful that we have the debt respite scheme agreed, and the new wording, on which I congratulate the department, and the new wording for the Long Title, which explicitly includes cold calling. Can my noble friend reassure us that the ban on cold calling that the Government intend to introduce will be as effective as possible and that, rather than using the ICO, which has very broad powers, the direct regulator—in particular, on pensions, the FCA—will be responsible for enforcing the ban? Regulatory imposition and enforcement by existing regulators is surely more effective in achieving compliance than relying on enforcement of widely drawn regulation.
This weekend, a story in the Mail on Sunday exposed the problems of nuisance calls to vulnerable elderly people about funeral plans. It was absolutely clear how ineffective the ICO has actually been in enforcing a ban on cold calling. It merely tries to sweep up the mess afterwards. It is cited as saying,
“where we find the law has been breached we will … take … action”.
I am so sorry to interrupt my noble friend, but there is no amendment in respect of cold calling tabled at Third Reading, and therefore we cannot speak to it. I reassure her that we have already committed to introducing legislation to ban cold calling in the other place.
Amendment 2 agreed.
Amendments 3 to 8
3: Page 3, line 15, at end insert—
“( ) Where the single financial guidance body provides information, guidance or advice to a person in pursuance of one of the functions mentioned in subsection (1)(a) to (c), it must consider whether the person would benefit from receiving information, guidance or advice in pursuance of any other of those functions (and it must ensure that SFGB delivery partners are under a similar duty).”
4: Page 3, line 16, leave out “support and co-ordinate the development of” and insert
“develop and co-ordinate”
5: Page 3, leave out lines 21 and 22 and insert—
“(13A) In developing and co-ordinating the national strategy, the single financial guidance body must work with others, such as those in the financial services industry, the devolved authorities and the public and voluntary sectors.”
6: Page 3, line 23, leave out subsection (14)
7: Page 3, line 38, leave out subsection (15)
8: Divide clause 2 into two clauses, the first (Functions) consisting of subsections (1) to (3) and (9) to (13A) and the second (Cold-calling) consisting of subsections (4) to (8)
Amendments 3 to 8 agreed.
Clause 3: Specific requirements as to the pensions guidance function
9: Page 4, line 1, leave out from “In” to “insert” in line 2 and insert “section 137FB of the Financial Services and Markets Act 2000 (FCA general rules: disclosure of information about the availability of pensions guidance), after subsection (3)”
Amendment 9 agreed.
Amendments 10 and 11
10: Insert the following new Clause—
“Debt respite scheme: advice to the Secretary of State
(1) The Secretary of State must, within three months of the establishment of the single financial guidance body, seek advice from the body on the establishment of a debt respite scheme.
(2) A debt respite scheme is a scheme designed to do one or more of the following—
(a) protect individuals in debt from the accrual of further interest or charges on their debts during the period specified by the scheme,
(b) protect individuals in debt from enforcement action from their creditors during that period, and
(c) help individuals in debt and their creditors to devise a realistic plan for the repayment of some or all of the debts.
(3) The matters on which the Secretary of State may seek advice include (but are not limited to)—
(a) the appropriate person to administer the scheme (and the single financial guidance body may recommend the creation of a new body for this purpose);
(b) whether the scheme should apply in England only, or whether it should also apply in Wales or Northern Ireland (or both);
(c) the scope and design of the scheme, for example—
(i) the types of debtors and the types of debts it should cover; (ii) the types of protections it should give;
(iii) the time period for which the protections should apply;
(iv) what the obligations on debtors and creditors should be during any period for which protections apply, including any period of a repayment plan;
(v) the consequences of a failure by a debtor or a creditor to comply with a repayment plan;
(d) how the scheme should work, for example—
(i) how an application should be made for the protections given by the scheme;
(ii) suitable arrangements to keep creditors informed;
(iii) whether there should be a central register of persons admitted to the scheme;
(e) how the scheme should be implemented.
(4) The single financial guidance body must provide the advice sought within 12 months of its establishment.
(5) The Secretary of State must publish the advice.”
11: Insert the following new Clause—
“Debt respite scheme: regulations
(1) As soon as reasonably practicable after receiving advice from the single financial guidance body under section (Debt respite scheme: advice to the Secretary of State), the Secretary of State must consider whether to make regulations under this section.
(2) After receiving advice from the single financial guidance body under section (Debt respite scheme: advice to the Secretary of State), the Secretary of State may make regulations establishing a debt respite scheme.
(3) The regulations must take the advice into account.
(4) The regulations may provide for the scheme to apply—
(a) in England only,
(b) in England and Wales,
(c) in England and Northern Ireland, or
(d) in England, Wales and Northern Ireland.
(5) Regulations under this section may—
(a) make different provision for different purposes,
(b) make different provision for different areas,
(c) make incidental, supplemental, consequential, transitional or saving provision, and
(d) apply to obligations entered into, or debts due to be repaid, before the regulations come into force.
(6) Provision under subsection (5)(c) may amend any provision made by or under—
(a) an Act of Parliament,
(b) in the case where the regulations provide for the scheme to apply in Wales, a Measure or Act of the National Assembly for Wales, and
(c) in the case where the regulations provide for the scheme to apply in Northern Ireland, Northern Ireland legislation.
(7) Regulations under this section are to be made by statutory instrument.
(8) An instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of —
(a) each House of Parliament,
(b) in the case where the regulations provide for the scheme to apply in Wales, the National Assembly for Wales, and
(c) in the case where the regulations provide for the scheme to apply in Northern Ireland, the Northern Ireland Assembly.”
Amendments 10 and 11 agreed.
Clause 14: Disclosure of information
12: Page 12, line 29, leave out subsection (9)
Amendment 12 agreed.
Clause 19: Interpretation of Part 1
13: Page 15, line 4, at end insert—
“the “devolved authorities” means— (a) the Scottish Ministers,
(b) the Welsh Ministers, and
(c) the Department for Communities in Northern Ireland;”
Amendment 13 agreed.
Clause 20: Transfer to FCA of regulation of claims management services
14: Page 15, line 32, leave out “England or Wales” and insert “Great Britain”
My Lords, I announced on Report in response to amendments tabled by the noble Baroness, Lady Meacher, the Government would bring forward amendments to introduce an interim fee cap in respect of PPI claims management services. Amendments 25, 26, 27, 29 and 30 honour that commitment—and I am sorry to see that the noble Baroness is not in her place.
As noble Lords are aware, this Bill already puts a duty on the FCA to cap fees charged in respect of financial services claims. This will ensure fair and proportionate prices for consumers using these services. However, as we have previously discussed, the implementation of the new regulatory regime and an effective, robust cap will necessarily take some time. This is a particular concern, given that the FCA’s PPI claims deadline may have passed by the time the FCA’s fee cap is in place. That is why the Government are introducing an amendment to set a fee cap at 20%, excluding VAT, of the claim value. The interim fee cap will apply to both CMCs and legal services providers that carry out claims management services in relation to PPI claims, to be enforced by the relevant regulators. It will be enforced by relevant regulators from two months after the Bill receives Royal Assent, until the FCA is in a position to implement its own cap. This cap will complement the range of measures in relation to PPI and other financial claims that the claims management regulation unit has announced. These include banning upfront fees and banning charges, where it is identified that the consumer does not have a relationship or relevant policy with the lender, as well as ensuring that all cancellation charges are reasonable and that consumers are provided with an itemised bill setting out details of what they relate to. This package of measures will support the Government’s aim to ensure that the claims management sector works in the interests of consumers by protecting them from excessive fees.
On Report, I also committed to tabling a government amendment to extend the FCA regulation of claims management to Scotland, should the UK and Scottish Governments agree that position. I am pleased to be able to confirm that the Scottish Government have now written to the UK Government to confirm agreement to extending regulation there. It highlighted that the situation in Scotland has changed since this issue was first discussed earlier this year. Legislation is currently progressing through the Scottish Parliament that will allow Scottish solicitors to offer increased funding options to clients on a no-win no-fee basis. As a result of these changes, Scottish solicitors will no longer need to set up CMCs to offer damages-based agreements to clients, and the CMC landscape is expected to change significantly.
To ensure that CMCs are not able to take advantage of this potential gap in regulation by targeting Scottish consumers, the UK and Scottish Governments have now agreed that FCA claims management regulation should extend to Scotland. This will ensure that there are appropriate regulatory standards in place to deal with CMC practices across Great Britain. These amendments follow up on my commitment on Report and do just that, extending FCA regulation of CMCs to Scotland, which will ensure that Scottish consumers are protected in the same way as those in England and Wales.
I note that the constitutional position of this issue has not been entirely straightforward as CMC regulation clearly concerns a mix of reserved and devolved matters. The regulation of the legal profession in Scotland is of course devolved, whereas matters of competition and aspects of consumer protection are reserved. It is the UK Government’s view that CMC regulation concerns reserved matters of competition and consumer protection. The Scottish Government have confirmed that they will seek the legislative consent of the Scottish Parliament for the CMC provisions as part of the wider legislative consent Motion for this Bill.
For the purposes of record, I should note that the UK Government’s view is that only Clause 20(4) relating to consumer advocacy is relevant to the legislative consent process, although I am aware that the Scottish Government might take a broader interpretation of how much of this is covered by the LCM. Nevertheless, the crucial issue here is that we have agreement that FCA regulation of CMCs should cover Scotland. I believe that this represents a sensible outcome which will benefit and protect consumers across Great Britain.
I am sure your Lordships will agree that the introduction of an interim restriction on charges in respect of CMCs is a positive step forward in ensuring that the claims management sector works in the interests of consumers. I am sure you will also agree that it is desirable to extend FCA regulation of CMCs to Scotland, given the change in circumstances there. I beg to move.
My Lords, I apologise, as when I last spoke, I attributed to the noble Viscount, Lord Trenchard, a very eloquent speech that was made on cold calling and the way it targets vulnerable people, when it was the noble Viscount, Lord Brookeborough, who made that speech. I apologise to both parties. If I have any excuse, it is that I confuse my own children, and one of them is male and the other is female, so it is even more embarrassing.
As regards this group of amendments, my only regret is that the cap on fees is set at 20%. It would have been better to have a lower cap. However, we congratulate the Government on the underlying principle of taking temporary action because it is very likely that by the time the FCA gets its grip on this issue we will be beyond the reach of future PPI claims. However, other than that, I once again thank the Minister for being responsive to the issues that have been raised all around the House, including this one and those of cold calling, debt respite and financial inclusion. This is a very important move by the Minister and her name will be attached to these issues well into the future.
My Lords, I too once again thank the Minister and all parties who have worked so hard on this Bill. I thank the noble Earl, Lord Kinnoull, who initially raised the issue of Scotland. It is excellent that the whole of Great Britain is included in the Bill. I thank the department for all the hard work that it has done to achieve this.
I too am delighted to see a cap on the PPI claims management fee. Like the noble Baroness, Lady Kramer, I would very much have liked the Government to agree that the parties responsible for the mis-selling would pay the fee rather than taking it out of the compensation that is paid to the customer. I understand that there may be an issue over the profitability of the claims management company itself but perhaps a compromise would be to split the 20% so that the customer gets 90% of what is due and the financial firm that has done the mis-selling perhaps pays 10% as well to the claims management firm. Having said that, I certainly welcome a 20% cap. I once again thank the noble Lords, Lord Stevenson, Lord Sharkey and Lord McKenzie, and the noble Baronesses, Lady Kramer and Lady Drake, the noble Earl, Lord Kinnoull, and all other noble Lords who have made such great improvements to the Bill.
My Lords, I cannot resist speaking briefly because of the good news in this group on the Scottish side. I pay tribute to and thank the Minister and her colleague, the noble Lord, Lord Young of Cookham—he of the very early morning email, which I received so often during the process of the Bill and which made me feel jolly lazy. I also pay tribute to and thank the noble Baroness, Lady Altmann, who added her name to my Scottish amendments; they were of course badly drafted, and I thank the parliamentary draftsman for correcting all that.
However, this set of amendments is special for another reason: it is a rare example of good co-operation between the UK and Scottish Governments. In fact, in this Chamber last night we debated the mechanics of devolution and how the UK Government and the devolved Administrations work. This is a wonderful example of how it should work, and it has worked to the advantage of our fellow citizens. I am therefore delighted, I very much hope that this will be oft repeated, and I thank the Minister again.
My Lords, I declare my interests as set out in the register, as I have just entered the 50th year of my partnership in the global legal firm DAC Beachcroft. I also chair the British Insurance Brokers’ Association. Colleagues will recall that I have made a number of speeches about the need to regulate the claims management sector. Further reform is urgently needed, but these amendments are a step in the right direction and I welcome them.
One of the biggest problems posed by CMCs is the potential for consumers to lose a large proportion of their damages in fees, despite the fact that the level of expertise required for a CMC to manage claims is remarkably low. The regulation of these firms should therefore be consistent across the whole sector. I will just mention two significant benefits that come from what the Government are now doing. First, we will have a robust authorisation regime based on understanding the business models of individual CMCs, which will prevent those firms that do not offer good value for consumers operating. Secondly, we will have personal accountability for senior managers of CMCs to ensure that when a firm is struck off, its directors cannot simply resurface as a new CMC.
The FCA now has the power to cap under these amendments, but it should urgently consider extending the cap to other claims to address the drastic spike in claims related, for instance, to gastric sickness while on holiday, to which the noble Earl, Lord Kinnoull, drew attention in earlier debates. It is no coincidence that there has been this massive surge in claims, just as CMCs prepare for the deadline for bringing PPI claims and the introduction of measures to tackle the high number of whiplash claims. We are therefore dealing with quite a range of possible actions that the Government need to take.
I was disappointed, not by anything my noble friend Lady Buscombe has ever said or done, but because the Government published a consultation response last week entitled Cutting Costs for Consumers in Financial Claims which was completely silent on any plans for action in the sector. By need for action I mean the need to control charges in the personal injury sector, especially as the Government move forward with long overdue plans for whiplash reform. Question 20 in the original consultation paper was:
“Is there a need to consider further fee controls in other regulated claims sectors such as Personal Injury or Employment in future?”.
I do not know what the replies to that question were but, sadly, there was complete silence in response. I just hope that, as the FCA prepares to regulate this sector, it will bear in mind at the height of its agenda the customer/consumer detriment from the actions of CMCs, which we have debated many times in this House. At last, it appears that action is being taken, but it will have to go much wider than these amendments, although they are a very good start.
Perhaps I may respond quickly to my noble friend Lord Hunt. Both we and the Financial Conduct Authority are aware that our plans for whiplash reform could have an impact on this market. I reassure him that the FCA will certainly keep this sector under review and will monitor developments closely during the implementation phase.
My Lords, given the strong consensus that has emerged from the noble Lords who have spoken on these amendments—the noble Baronesses, Lady Kramer and Lady Altmann, the noble Earl, Lord Kinnoull, and the noble Lord, Lord Hunt—I can be brief. We support these amendments and we also support the provisions in the Bill, particularly in relation to a senior manager regime. That is very important.
Amendments 14 to 24 respond to the Scottish Government’s request for the regulation of CMCs to be extended to Scotland, and they will also help to negate the concerns that have been expressed about cross-border planning.
With regard to Amendment 25, although she is not here today, we should place on record our thanks to the noble Baroness, Lady Meacher, for leading the charge on this issue. As others have noted, the cap has been set at 20% exclusive of VAT, which is at the upper end of the range on which the Government consulted. However, we should see that in context. Currently it is suggested that the average fee rate for CMCs is some 37% of gross revenue, which is almost double the level at which the cap has been set.
It may be appropriate to remind ourselves of the scale of PPI, which I know will be coming to an end in August. I think that banks’ finance companies have paid out more than £26 billion in compensation over recent years. That is an extraordinary amount of money, and I wonder what that injection of funding to the consumer has done to the economy. It is important that the cap bites as soon as possible. Can the Minister confirm that the cap will apply to charges arising after the entering into force of Clause 21—just two months after this legislation comes into force—notwithstanding that the claims to which they relate may have preceded that? Can she confirm that it is not the date of the claim that is relevant for these purposes but the date when the compensation is paid?
Amendment 29 would appear to limit the application of the cap so that it does not apply to Scotland in respect of charges relating to claims prior to the transfer of regulation to the FCA. Perhaps the Minister could confirm that my understanding is correct. It would also seem to deny the application of Schedule 4 to Scotland. This schedule is concerned in part with transfer schemes in relation to the FCA. Perhaps the Minister could say what, if any, restructuring in Scotland might be affected by this change and how it would be affected if Schedule 4 were not applied to it.
Overall, we support these important amendments and look forward to the Minister’s reply.
I thank the noble Lord, Lord McKenzie. I am so afraid of making a mistake at this late stage that I would prefer to write to him in reply.
Amendment 14 agreed.
Amendments 15 to 24
15: Page 15, line 42, leave out “England or Wales” and insert “Great Britain”
16: Page 16, line 6, leave out “England and Wales” and insert “Great Britain”
17: Page 16, line 8, leave out “England and Wales” and insert “Great Britain”
18: Page 16, line 11, leave out “England and Wales” and insert “Great Britain”
19: Page 16, line 15, leave out “England and Wales” and insert “Great Britain”
20: Page 16, line 16, leave out “England and Wales” and insert “Great Britain”
21: Page 16, line 20, leave out “England and Wales” and insert “Great Britain”
22: Page 16, line 22, leave out “England and Wales” and insert “Great Britain”
23: Page 17, line 7, leave out “England or Wales” and insert “Great Britain”
24: Page 17, line 12, leave out “England or Wales” and insert “Great Britain””
Amendments 15 to 24 agreed.
Amendments 25 to 27
25: Insert the following new Clause—
“PPI claims and charges for claims management services: general
(1) This section and sections (PPI claims: interim restriction on charges before transfer of regulation to FCA) and (PPI claims: interim restriction on charges after transfer of regulation to FCA) make provision for a fee cap to apply in certain circumstances to charges for regulated services provided in connection with a PPI claim.
(2) The following provisions explain terms used in those sections.
(3) The fee cap applicable to the amount charged for regulated services provided in connection with a PPI claim is 20% of the amount recovered for the claimant in satisfaction of the claim.
Accordingly, where nothing is recovered (whether or not a claim has been made or concluded) the fee cap is zero.
(4) But the charging of a reasonable amount for work done for the claimant is not to be regarded as exceeding the fee cap for a PPI claim if—
(a) the amount is charged for regulated services provided in connection with the claim,
(b) no other amount is charged for those services,
(c) the claimant has terminated the agreement governing the provision of such services (whether before or after the making of a claim), and
(d) the termination was not achieved by the cancellation of the agreement during a cooling off period available to the claimant by right (whether conferred by the agreement or otherwise).
(5) References to a claim are to a claim (however described) seeking compensation, restitution, repayment or any other financial remedy or relief, whether or not the claim is made or could be made by way of legal proceedings.
(6) References to the amount charged for regulated services provided in connection with a PPI claim are references to a sum comprising all amounts charged for such services in connection with the claim (whether or not charged under a single agreement), exclusive of VAT.
(7) References to the amount recovered for the claimant, in relation to a PPI claim, include a reference to any amount which (instead of being paid to or to the order of the claimant)—
(a) is set off against a debt due from the claimant to the person against whom the claim is made, or
(b) is paid to any person other than the claimant (whether a person providing regulated services in connection with the claim or any other person) with a view to discharging the whole or part of a debt due from the claimant.
(8) In this section references to regulated services are—
(a) so far as relevant for the purposes of section (PPI claims: interim restriction on charges before transfer of regulation to FCA), to be read as referring to regulated claims management services, and
(b) so far as relevant for the purposes of section (PPI claims: interim restriction on charges after transfer of regulation to FCA), to be read as referring to any service which is a regulated claims management activity.
(9) “PPI claim” means a claim relating to the selling of payment protection insurance (whether it concerns amounts paid by the policyholder or otherwise).
(10) “Regulated claims management services”—
(a) does not include any reserved legal activities of the kind mentioned in section 12(1)(a) or (b) of the Legal Services Act 2007 (exercise of a right of audience or the conduct of litigation), but
(b) otherwise, has the same meaning as in the Compensation Act 2006 (see section 14 of that Act).
(11) “Regulated claims management activity” has the same meaning as in the Financial Services and Markets Act 2000 (see the definition inserted by this Act in section 417(1) of that Act).
(12) “Section 22(1B) specified activity provisions” means provisions of an order made under section 22(1B) of the Financial Services and Markets Act 2000 (as inserted by this Act) which specify a kind of activity as a regulated activity within the meaning of that Act.
(13) “The FCA” means the Financial Conduct Authority.”
26: Insert the following new Clause—
“PPI claims: interim restriction on charges before transfer of regulation to FCA
(1) A regulated person —
(a) must not charge a claimant, for regulated claims management services provided in connection with the claimant’s PPI claim, an amount which exceeds the fee cap for the claim, and
(b) must not enter into an agreement that provides for the payment by a claimant, for regulated claims management services provided in connection with the claimant’s PPI claim, of charges which would breach, or are capable of breaching, the prohibition in paragraph (a).
(2) A breach of either of those prohibitions is not actionable as a breach of statutory duty; but—
(a) any payment in excess of the fee cap for a PPI claim is recoverable by the claimant, and
(b) any agreement entered into in breach of subsection (1)(b) is not enforceable to the extent it provides for a payment that breaches or is capable of breaching the prohibition in subsection (1)(a).
(3) In subsection (2) “payment” means a payment of charges for regulated claims management services provided in connection with the claim.
(4) A relevant regulator—
(a) must ensure that it has appropriate arrangements for monitoring and enforcing the prohibitions in subsection (1) as they apply to the regulated persons for whom it is the relevant regulator;
(b) may make rules for the purposes of doing so (which may include provision applying, in relation to breaches of a prohibition in subsection (1), functions the relevant regulator has in relation to breaches of another restriction).
(5) For the purposes of this section— (a) “regulated person” means—
(i) a person who falls within any category of regulated person specified in column 2 below, or
(ii) any person not within sub-paragraph (i) who, by virtue of article 4 of the Compensation (Exemptions) Order 2007 (S.I. 2007/209), is not prevented by section 4(1) of the Compensation Act 2006 from providing regulated claims management services;
(b) “relevant regulator” means a person listed in column 1 below; and
(c) the regulated persons for whom a person listed in column 1 below is the relevant regulator are described in the corresponding entry or entries in column 2.
Relevant regulator Regulated persons The Regulator Persons authorised to provide regulated claims management services under section 5(1)(a) of the Compensation Act 2006. The General Council of the Bar 1. Persons who, or licensable bodies which, are authorised by the General Council to carry on a reserved legal activity. 2. European lawyers registered with the General Council under the European Communities (Lawyer’s Practice) Regulations 2000 (S.I. 2000/1119). The Law Society of England and Wales 1. Persons who, or licensable bodies which, are authorised by the Law Society to carry on a reserved legal activity. 2. European lawyers registered with the Law Society under the European Communities (Lawyer’s Practice) Regulations 2000. 3. Foreign lawyers registered with the Law Society under section 89 of the Courts and Legal Services Act 1990. The Chartered Institute of Legal Executives Persons authorised by the Institute to carry on a reserved legal activity.
Persons authorised to provide regulated claims management services under section 5(1)(a) of the Compensation Act 2006.
The General Council of the Bar
1. Persons who, or licensable bodies which, are authorised by the General Council to carry on a reserved legal activity.
2. European lawyers registered with the General Council under the European Communities (Lawyer’s Practice) Regulations 2000 (S.I. 2000/1119).
The Law Society of England and Wales
1. Persons who, or licensable bodies which, are authorised by the Law Society to carry on a reserved legal activity.
2. European lawyers registered with the Law Society under the European Communities (Lawyer’s Practice) Regulations 2000.
3. Foreign lawyers registered with the Law Society under section 89 of the Courts and Legal Services Act 1990.
The Chartered Institute of Legal
Persons authorised by the Institute to carry on a reserved legal activity.
(7) In column 2 “reserved legal activity” has the meaning given by section 12 of the Legal Services Act 2007.
(8) This section applies as follows—
(a) the prohibition in subsection (1)(a) applies only to charges imposed under an agreement entered into during the first interim period, and
(b) the prohibition in subsection (1)(b) applies only to agreements entered into during that period.
(9) In subsection (8) “the first interim period” is the period—
(a) beginning with the day on which this section comes into force, and
(b) ending with the day before the day on which the first section 22(1B) specified activity provisions come into force for (or for purposes which include) the purposes of the general prohibition in section 19 of the Financial Services and Markets Act 2000.”
27: Insert the following new Clause—
“PPI claims: interim restriction on charges after transfer of regulation to FCA
(1) The rule specified in subsection (2) is to be treated for the purposes of the Financial Services and Markets Act 2000 as if—
(a) the rule were a general rule made by the FCA under section 137A of that Act, and
(b) this section were contained in that Act;
and accordingly functions conferred on the FCA by that Act which apply in relation to general rules made under section 137A apply to that rule as they apply to other general rules made under that section.
(2) The rule is that an authorised person—
(a) must not charge a claimant, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, an amount which exceeds the fee cap for the claim; and
(b) must not enter into an agreement that provides for the payment by a claimant, for a service which is a regulated claims management activity provided in connection with the claimant’s PPI claim, of charges which would breach, or are capable of breaching, the prohibition in paragraph (a).
(3) A breach of either of those prohibitions is not actionable as a breach of statutory duty (despite section 138D(2) of the Financial Services and Markets Act 2000); but—
(a) any payment in excess of the fee cap for a PPI claim is recoverable by the claimant, and
(b) any agreement entered into in breach of the prohibition in subsection (2)(b) is not enforceable to the extent it provides for a payment that breaches or is capable of breaching the prohibition in subsection (2)(a).
(4) In subsection (3) “payment” means a payment of charges for a service which is a regulated claims management activity provided in connection with the claim.
(5) The rule in subsection (2) applies as follows—
(a) the prohibition in paragraph (a) applies only to charges imposed under an agreement which is entered into during the second interim period, and
(b) the prohibition in paragraph (b) applies only to agreements entered into during that period.
(6) In subsection (5) “the second interim period” is the period—
(a) beginning with the day on which the first section 22(1B) specified activity provisions come into force for (or for purposes which include) the purposes of the general prohibition in section 19 of the Financial Services and Markets Act 2000, and
(b) ending with the day before the coming into force of the first relevant general rule made by the FCA (whether for all purposes or for any specific purpose).
(7) In subsection (6)(b) “relevant general rule” means a general rule that—
(a) is made under subsection (1) of section 137FD of the Financial Services and Markets Act 2000 (as inserted by this Act), and
(b) applies to, or to any description of, PPI claims (whether or not it also applies to anything else).
(8) In this section “authorised person” has the same meaning as in the Financial Services and Markets Act 2000 (see section 31(2) of that Act).”
Amendments 25 to 27 agreed.
Clause 22: Extent
Amendments 28 and 29
28: Page 19, line 20, at end insert—
“( ) Sections (Debt respite scheme: advice to the Secretary of State) and (Debt respite scheme: regulations) extend to England and Wales and Northern Ireland.”
29: Page 19, line 24, leave out subsection (3) and insert—
“(3) The following provisions in Part 2 extend to England and Wales—
(a) section 20(12) and Schedule 4;
(b) section (PPI claims: interim restriction on charges before transfer of regulation to FCA).
(3A) The other provisions in Part 2 extend to England and Wales and Scotland.”
Amendments 28 and 29 agreed.
Clause 23: Commencement
Amendments 30 to 32
30: Page 19, line 38, at end insert—
“( ) Sections (PPI claims and charges for claims management services: general) to (PPI claims: interim restriction on charges after transfer of regulation to FCA) come into force at the end of the period of two months beginning with the day on which this Act is passed.”
31: Page 19, line 40, at end insert—
“( ) Regulations under subsection (2) must provide for sections (Debt respite scheme: advice to the Secretary of State) and (Debt respite scheme: regulations) to come into force on the same day as section 1(1).”
32: Page 20, line 5, at end insert “, and ( ) different provision for different areas.”
Amendments 30 to 32 agreed.
In the Title
33: Line 1, after “body” insert “(including provision about cold-calling and a debt respite scheme)”
Amendment 33 agreed.
Amendment 34 not moved.
A privilege amendment was made.
That the Bill do now pass.
My Lords, I would like to take a moment to reflect on the Bill and its passage through your Lordships’ House. This is important legislation that will benefit members of the public and provide a sustainable legislative framework for public financial guidance and the regulation of claims management companies in the future. It has improving financial capability at its heart and I am proud to be associated with it.
At Second Reading I said that I hoped we would have constructive engagement as the Bill progressed through this House. Your Lordships have not disappointed. The Bill has rightly been accorded due and diligent attention from noble Lords across the House, and I would like to thank all those who have engaged on the Floor of the House and also in the many meetings we have had outside.
I would like also to thank my noble friend Lord Young of Cookham for all his help and assistance as the Bill has progressed. He has been a tower of strength and a more than able co-pilot throughout.
Finally, but importantly, I would like to thank the Bill team and officials across the Department for Work and Pensions, Her Majesty’s Treasury, the Department for Digital, Culture, Media and Sport, and the Ministry of Justice. Many of them have put in incredibly long hours to support my noble friend and me during debates, facilitate briefing meetings and provide the updates, letters and briefings that many noble Lords have received. I may add that other noble Lords, in particular the noble Lord, Lord Stevenson, referenced the cross-departmental support we have had. It has been amazing and has made an enormous difference to the outcome of the Bill.
Throughout the passage of the Bill we have listened to the arguments and suggestions made by noble Lords, and, in many cases, have agreed and brought forward amendments that strengthen it. I think we can all agree that this Bill leaves here in good shape, and I believe that this is in no small part due to the helpful and constructive manner in which all sides of the House have engaged with it.
My Lords, I will say just a few words. I start by thanking the noble Baroness, Lady Buscombe, for her kind words. We are grateful again for the open-minded manner in which she and her co-pilot, the noble Lord, Lord Young, have approached the Bill. I never had the opportunity to ask him whether Luton Airport was on the flight path, but I will try to on a future occasion.
Invariably it is said at the end of a Bill process that the House of Lords has improved the Bill from its starting point. While tenuous in some instances, it is definitely true with this Bill. Support across the Chamber has enabled the framework for a debt respite scheme; consumer protection on cold calling; strengthening access to information and guidance on accessing pensions; a duty of care on setting standards; requiring that pensions guidance functions are provided freely and impartially; strengthening offences of mimicking; as well as securing the dashboard. These changes have come about because, broadly, we have had a shared analysis of what the Bill could achieve; a shared analysis with the Lib Dems and Cross-Benchers as well as with the Government, including the noble Baroness, Lady Altmann.
We are very grateful for the proactive approach of the Bill team, which went above and beyond in trying to fit our amendments into the confines of the scope of the Bill. I do not know how many variations of the debt respite provisions the team had to cope with, but there were many. I offer my thanks to the Lib Dems for their joint working on some key areas, among them the noble Lords, Lord Sharkey and Lord Kirkwood, and the noble Baroness, Lady Kramer.
Finally, I thank my colleagues, my noble friend Lady Drake, our pensions supremo who unfortunately is not in her place today, and of course my noble friend Lord Stevenson for his experience and passion on matters of the debt space. It has made my role a good deal easier.
Bill passed and sent to the Commons with amendments.