Asked by
To ask Her Majesty’s Government what plans they have to require
the Financial Conduct Authority to have regard to financial
inclusion.
(Con)
Financial inclusion is a priority for this Government. Her
Majesty’s Treasury and the Financial Conduct Authority already
work closely to meet the Government’s aims on tackling financial
exclusion. As outlined in the future regulatory framework review
consultation that was published in November 2021, the FCA’s
current and ongoing initiatives to improve financial inclusion
demonstrate that it can already effectively support the
Government’s financial inclusion agenda through its existing
operational objectives and regulatory principles.
(Con)
My Lords, financial exclusion has dogged this nation for decades.
It is a personal tragedy for individuals and holds individuals,
communities and businesses back. Does my noble friend not agree
that with a concerted effort from HMT, a “have regard” duty for
the FCA and the involvement of the Bank of England and all
financial services firms, we could truly have an economy and a
society that worked for everybody and were truly financially
inclusive?
(Con)
As I am sure my noble friend knows, since 2019 the Government
have chaired the Financial Inclusion Policy Forum, which brings
together the Government, the FCA, industry and consumer groups to
deliver on the aims that he has set out. We are aware that there
have been responses to the recent future regulatory framework
review on the question of a “have regard” duty to financial
inclusion. The Government are considering all the responses to
that consultation and will set out their response in due
course.
(Lab)
When the Government last discussed this, they said they would try
to make sure that there was a bank left in every community, and
that they were working on that policy. I remind the Minister that
there are record numbers of closures, leaving many vulnerable
communities without a bank. When are the Government going to take
some action—or are they going to wait until all the banks have
closed before they do anything?
(Con)
My Lords, we are taking action in a number of areas. As we have
committed to previously, we will ensure that we legislate to
ensure access to cash. There are also some industry led-solutions
under way, with five new bank hubs set up this year that allow
different banks to pool their services together to ensure that
communities still have access to those important services.
(Non-Afl)
Does the Minister agree that one means of improving financial
inclusion would be to add financial literacy to the core
curriculum in schools, and will she now consider it?
(Con)
My Lords, financial education is covered within both the
citizenship and mathematics curricula, and primary schools are
strongly encouraged to teach citizenship, including financial
education. In addition, the Money and Pensions Service published
financial education guidance for primary and secondary schools
last year to support school leaders in enhancing the financial
education that is currently delivered in their schools to make it
memorable and impactful.
(LD)
What assessment have the Government made of the effectiveness of
the FCA in tackling the poverty premium—that is, the extra cost
that people on low incomes pay for essential services and
products such as prepayment energy meters? Does the Minister
agree that, as the cost-of-living crisis grows, the FCA could
make more progress on this vital issue if the regulator were
required to consider financial inclusion across all areas of its
work?
(Con)
My Lords, the Government are conscious of the poverty premium,
and so is the Financial Conduct Authority. We are committed to
ensuring that all consumers can access financial services and
products that are affordable to them. There are examples of
concrete action in this area—for example, a pilot of a
no-interest loans scheme and a pilot of prize-linked savings
schemes for people who are struggling to access appropriate and
affordable financial services. That is something that we want to
continue to build on.
(Con)
Does the Minister share my concern at the rate of closures of
rural banks? This is a particular problem for the elderly who
often have no access, other than by public transport, to get to
banks. It also poses security problems for many shops in what is
coming up to the busiest time of year. Should there not be some
sort of social policy constraint on banks to ensure that a
minimum number of branches are kept open in rural areas?
(Con)
In addition to the answer which I gave previously, it is also
possible for consumers to use Post Office services to carry out
many of the functions they need to access banking. That network
is distributed around the country.
(CB)
My Lords, the Centre for Social Justice estimates that 1 million
people are currently borrowing from illegal moneylenders.
Clearly, they do not feel financially included. What steps will
the Government take to stop that, and to ensure that these people
known more about credit unions, for instance?
(Con)
The noble Baroness is right to raise the issue. The Government
are taking a number of actions in this area. I previously
referred to the pilot of a no-interest loan provision which the
Government are supporting. They are also putting record financing
into consumer debt advice to ensure that if people are in
trouble, they get access to the help which they need.
(Lab)
My Lords, I have a letter here written by the FCA chief executive
to the Financial Services Consumer Panel, dated 20 October 2021.
In it, the FCA chief executive associates financial inclusion
with the expectation that
“Firms must pay due regard to the interests of its customers and
treat them fairly.”
Given that almost every financial product has been mis-sold, and
given that many banks have been engaged in money laundering, tax
dodging and sanction busting, so that it is hard to find a
pristine bank, how are the Government going to deliver fair
treatment of customers, when the FCA’s fines are puny, and they
have so far not secured better practice or behaviour.
(Con)
I do not recognise the picture which the noble Lord paints. Our
banks and financial services provide an essential service to
people up and down the country. They were one of our essential
partners in distributing the support we provided to businesses
through bounce-back loans and other support packages throughout
the pandemic. Yes, there have been certain problems in certain
areas, which is why the Government are taking action—for example,
on anti-money laundering legislation and counterterrorist
financing legislation. I am afraid to say that I just do not
agree with the noble Lord.
(Con)
My Lords, given that there is a significant amount of in-work
poverty, will the Minister join with me in congratulating those
employers who are working to assist their workforce to access
low-cost loans and debt repayments via salary deduction? Might
the Minister also consider encouraging some of the financial
firms to make financial education more widely available in the
workplace, given that many have not had the benefit of this
education in schools?
(Con)
My noble friend makes a very good point. Financial education
should not stop at schools, and the workplace offers a great
opportunity to continue that education. For example, with the
success of auto-enrolment in pensions, we see the importance of
an ongoing engagement in our financial lives throughout our
careers.
(Lab)
My Lords, the bank HSBC, the housing and homeless charity Shelter
and other charity partners are working collaboratively to ensure
that certain people with no fixed address are able to access
basic banking services. Do the Government welcome this kind of
innovative thinking? More importantly, what efforts are Ministers
making to encourage other banks to design and launch similar
products for other financially excluded persons?
(Con)
I absolutely welcome that kind of innovative thinking, and the
collaboration between the private sector and social enterprises,
to support vulnerable consumers. Of course, there are basic bank
accounts designed to ensure that everyone can have access to
banking services; however, we want to encourage continued
innovation and collaboration with the private sector.
(LD)
My Lords, what support are the Government currently giving the
credit union sector?
(Con)
My Lords, I think a noble Baroness before referenced the credit
union sector. It does excellent work in supporting people with
access to low-cost credit. I am sure that it is part of our
Financial Inclusion Policy Forum, where we bring together
representatives from industries of all sorts to look at what more
we can do to ensure financial inclusion in this country.
(Con)
Would my noble friend the Minister like to reflect for a moment
on the excellent work of the Financial Inclusion Commission,
which has put forward a plan to ensure that the regulator has a
“must have regard” provision to tackle financial inclusion? Will
she and her colleagues sit down with that commission and put
together an action plan that can see real progress in tackling
the issues facing financial inclusion?
(Con)
My Lords, the Government are absolutely committed to taking
action on financial inclusion. That is why we have the Financial
Inclusion Policy Forum that brings together industry, consumer
groups, the regulator and the third sector. We publish an annual
report on the Government’s work on financial inclusion, which
sets out the broad range of initiatives and ongoing work to
support the sentiment that my noble friend expressed about taking
action in this area.
