23 October 2017
- Government faces Lords defeat tomorrow over refusal to protect financial consumers
- Hard to understand why Ministers are resisting changes that have widespread support
- Policy needs action not words – let’s not miss this opportunity to introduce cold-calling ban
Cross-party amendments to Financial Guidance and Claims Bill call for:
- Ban on cold-calling for pensions
- Mandatory guidance for pension savers before transferring money out
- Breathing space to protect people with huge debts (vital as interest rates set to rise)
The Government faces potential defeat in the House of Lords tomorrow evening if it refuses to agree to cross-party amendments at teh Report Stage of the Financial Guidance and Claims Bill.
Ministers blocking measures to ban cold-calling ban and offer breathing space for debts: Having announced it wants to ban pensions cold-calling and introduce breathing space for people with unmanageable debts to help reschedule their payments, it is hard to understand why Ministers are refusing to agree to introduce the necessary legislation in the Bill now going through Parliament. Yet there is widespread support for this ban, across all political parties, consumers groups and providers.
Government says it won’t legislate for years: The Government has so far resisted all calls for these measures to be included in the Bill. Indeed, it has indicated that any legislation may have to wait until 2020. By that time, millions more people will have been plagued by nuisance calls, will be at risk of scams, and may lose their pensions. If the Government is serious about protecting consumers, then it has the ideal opportunity to act now.
Amendments to the Bill will be debated tomorrow with wide support across the Lords: A group of cross-party Peers has worked hard with the Parliamentary authorities to find ways to include these measures in the Bill. We are all concerned about doing more to protect consumers. The amendments would make a significant difference to the public and would pave the way for the Government to actually fulfil its commitments to ban cold-calling, help vulnerable customers and to allow those with big debts to have more time to receive help to sort out their financial affairs.
Ban Cold calling and use of data obtained by cold calling: One of the amendments will introduce legislation that enables the Government to ban cold-calling for pensions. Currently, it is illegal to cold-call about mortgages, but not about pensions. The proposed measures will make it an offence for anyone to make unsolicited approaches to the public about their pensions and will also ensure that the financial regulators have powers to remove the licence to operate from firms who do the cold-calling, or use data obtained from cold-calls.
Mandatory guidance before transferring money out of pensions: The Amendments will also try to ensure further consumer protection by requiring anyone who wants to transfer money from their pensions to have either independent financial advice or to speak to the free national guidance service. This helps to protect people against scam schemes in which they may be enticed into transferring to, as well as ensuring they understand the risks and implications of transferring money out of their pensions. Currently, the take-up of PensionWise is woefully low and people are moving money out of their pensions without realising the tax penalties they will pay.
Customer protection clause and breathing space: We are also calling for a special duty of care for vulnerable customers who need help with their financial affairs, including a breathing space for people with unmanageable debts, so when they approach the Financial Guidance body for help, their interest payments can be suspended for a short period, giving time to reschedule, rather than risking bankruptcy. Especially as interest rates seem set to rise, such protection is vital.
Combining MAS, TPAS and PensionWise into one free holistic guidance service: The Bill has received little attention so far, but is really important. It will merge the existing Money Advice Service, Pensions Advisory Service and PensionWise into one new body, that will offer holistic financial education, information and guidance under one banner. This will be a national service to provide free financial guidance, information and education to the public, to help them manage their money, savings and pensions.
Aim to improve financial capability and help the public make better financial decisions: Currently, many people do not know where to get to get help. There are numerous free services, but their activities are not ‘joined-up’ and many people are confused or simply do not know about the help available. The idea of improving these services is excellent and the Government should be congratulated for bringing forward this Bill. However it must take the opportunity to make the new system work better for the public.
So sad to have to vote against the Government but I am passionate about protecting consumers: I do not want to vote against the Government, but I came into politics with the aim of improving consumer protection and financial education, ensuring customers were treated more fairly by financial firms. This is something I am passionate about and it saddens me that I have had to join with Opposition parties to try to force such measures through, when it is so clear they are important for protecting the public. It is not good enough for Ministers to make promises, when the legislative chance arises we have to take it. Now is the time and I do hope the Government will listen to reason.