Financial Guidance and Claims Bill [Lords] — House of Commons, 2018-04-24
Topic: Domestic Commerce
John Eugene Joseph Dromey (Labour, Centre-left): My hon. Friend is absolutely right. There are legal consequences for those who make unlawful claims, but there are also business consequences, which in this case knock on to the legal profession and its work. Looking at it from every angle, this is a menace that we need to bring to an end; the question is how soon we can do so We hope that the Government will accept our proposals, not least because the Conservative party said at the 2017 general election that it would "consider a ban on companies cold calling people" This is the Government’s chance to keep at least that manifesto promise while protecting the public at the same time It is deeply welcome that the Government have taken the powers to ban cold calling for pensions. They have also indicated their support—indeed, the Minister did so earlier—for a wider ban, which our amendment calls for. We are not calling for a blanket ban, which the Minister believes could impinge on non-contentious issues such as doctor-patient calls. The situation is different when such an established relationship exists. We are talking about commercial companies that are pursuing a commercial advantage. All claims management companies should be banned from cold calling, so we urge the Government to set out in the Bill that they will stop the scourge of cold calls by claims management companies New clause 6—this is the only other provision to which I will speak—would introduce a duty of care by requiring claims management services to act in the best interests of customers, not least those who find themselves in a vulnerable situation. Due to the scope of the Bill, the new clause relates only to claims management services. However, although this change would be important, we believe that a duty of care is required across all financial service providers. Many consumers are forced to deal with financial providers when they are at their most vulnerable. Such people can include those who have been diagnosed with serious illnesses, including cancer. At present, the Financial Services and Markets Act 2000 requires that the FCA must have regard to "the general principle that consumers should take responsibility for their decisions" Frankly, that is not good enough The Financial Services Consumer Panel told the Lords Financial Exclusion Committee that consumers could reasonably be expected to take responsibility for their decisions only if firms had exercised a duty of care towards them. It suggested that such a duty would oblige financial services providers to avoid conflicts of interest and act in the best interests of their customers. The panel proposed amending the law to require the FCA to make rules on a duty of care, arguing that the introduction of such a duty would lead to a much-needed cultural change in the banking sector and the financial sector more generally Let us look at just one example. The charity Macmillan Cancer Support has said that people affected by cancer tell it that they experience barriers to getting the support that they need from the banking sector. By 2020, one in two people will have cancer at some point in their lives. Four in five people with cancer are £570 a month worse off on average as a result of their diagnosis. For example, Christine was first diagnosed with cancer in 2009, but is still feeling the financial effects today. She said: "The financial fall-out of cancer was huge—I went into my overdraft and had to take out a loan to pay it off. When I found out that my credit rating had suffered, it seemed unfair because I was trying my best to get back into work and to have money coming in…For people like me who want to go on living and working, it’s about having that short-term support and understanding. What would have been great was if I’d been able to have an honest conversation with my bank" A specific requirement therefore needs to be explicitly stated to ensure that all financial institutions do their best by the most vulnerable people in society. The strong evidence that has been presented by Macmillan clearly shows that a universal duty of care is required across financial services providers In the light of examples in which the principle of treating customers fairly is clearly failing customers, how has the FCA reassured Ministers that the current regulatory provisions are sufficient? Can the Minister provide further details on when the discussion paper to which he referred will be brought forward? I know that he is seized of the problem and wants progress to be made at the next stages. That is crucial and, once again, we want to get on with it, because we need to tackle the real problem that has been identified. What assurances can the Minister give that action will be taken to ensure the timely introduction of the duty of care following the outcome of the FCA’s consultation paper We strongly support amendments tabled by a number of hon. Members, led by my hon. Friend the Member for Harrow West (Gareth Thomas), that would ensure that banks and financial institutions take proper account of local and regional need, and do not let down local people, as is all too often the case now.