Dr.
Ladyman: I notice that our deliberations were joined
briefly by the deputy Chief Whip. He has obviously got wind that there
is a major rebellion going on here in Committee Room 9.
My hon.
Friend the Economic Secretary has given me the assurance I sought that
all these accounts will be covered by appropriate protection measures
and that people will have recourse to the Financial Ombudsman Service
if they need it. That is one assurance that I wanted to put on the
record.
I accept
entirely that my hon. Friend is seeking a diversity of providers. All I
wanted was to obtain a reassurance that, if he were to change his mind
and not seek a plurality of providers, he would have the power to do
that. He has given me that assurance too. I ask him not to rule out the
possibility that we may wish to limit these accounts to the Post Office
and perhaps to credit unions in the future. There are arguments in
favour of that; I agree that there also arguments in favour of there
being a plurality of suppliers.
The Post
Office said that it was looking for a partner; it did not say that it
wanted to get one from the banking or building society world. My
understanding is that it was simply looking for a partner. Perhaps
National Savings & Investment could be that
partner.
Mr.
Hoban: Alan Cook said last
Tuesday: “That
partner might well belong to one of the other associations at this
table.”————[Official
Report, Saving Gateway Accounts Public Bill Committee, 27 January
2009; c. 27,
Q49.] Of
course, it may well be the case that he will rely on the Association of
British Credit Unions, but for the coverage reasons that have already
been mentioned, perhaps it will be the banks and building societies
that he will look to when he forms a
partnership.
Dr.
Ladyman: Alan Cook may well have been looking for a
partner from those associations, but, equally, he may well have not
been. There might be other options. All I am seeking is an assurance,
which I believe I have received, on what will happen if the Government
were to conclude that they would like to limit the provision of the
accounts to the Post
Office.
Mr.
Hoban: Surely one of the findings of the pilots—it
was a point that was also made in the evidence session last week, not
by the potential account providers but by some of the witnesses that we
heard from in the morning—was that it is important to ensure
that there is accessibility. One of the pilots found that the closer
that people were to the account provider, the more likely it was that
they would take up the accounts. Therefore, what we would be looking
for is as many providers as possible, so that we increase accessibility
and as many people as possible can take up the accounts. Surely that is
something that hon. Members on both sides of the Committee can agree
on. By restricting provision to one set of providers, the risk is that
we will limit accessibility and work against the principle behind the
Bill, which is to encourage a savings culture among people of working
age on low
incomes.
Dr.
Ladyman: I agree with the hon. Gentleman that
accessibility will be an important factor, but it is also worth noting
that the Government are putting a great deal of money into this scheme.
If they can get more bang for their buck, they might wish to do so, and
the bang that they might be seeking is to use this scheme to encourage
the use of the post office.
Conservative
Members have been banging on for years now about how we must stand
behind the Post Office. All I am saying is that if it were to become
the policy of the Government that they wanted to use the saving gateway
accounts system to help the Post Office to build up its footfall and
customer base by limiting the access to these accounts to the Post
Office, they ought to ensure that they have the power in the Bill to do
so. I am not suggesting that it is the Government’s policy. I am
not suggesting that it is a desirable thing to do at the moment.
However, we should ensure that we have got the
power.
Mr.
Browne: I understand the hon. Gentleman’s point,
although I sympathise more with the Economic Secretary’s point
of view. I want to be clear in my mind whether the hon. Member for
South Thanet can envisage a scenario whereby the Government would
terminate accounts that were held with banks—perhaps halfway
through the two-year period—and order those accounts to be
transferred to a monopoly supplier. There are potential risks, even if
the Government only notionally have that power, of intervening in a way
that may cause a lot of
disruption.
Dr.
Ladyman: That is not what I am suggesting at all. What I
am saying is that at the outset of these accounts, it may be desirable
for the Government to limit them to the Post Office. One of the things
that struck me about the attitude of the banks when they gave evidence
to the Committee was the clear implication that they do not like poor
people very much. They are quite keen on regular savers, they are quite
keen on people, such as
MPs, who have a bob or two, but they are not very keen on those accounts
that do not provide them with a very big
profit. It
may well become Government policy to encourage to a greater extent
those providers who will service people on low incomes and who will
encourage people with just a small amount of money to save with them,
and that might be the Post Office. All I am suggesting is that the
Government might wish to consider the possibility, at the outset of the
scheme, that they limit the provision to the Post Office and the Post
Office’s partner, whoever that might be, in order to encourage
footfall into our post offices and to help support the post office
network. I am not suggesting that that is Government policy. I am not
suggesting that that is what they will do. I simply want to make sure
that they have the power to do that at the outset if that is what they
choose to do. My hon. Friend has given me that assurance, so I am
content, and I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
5 ordered to stand part of the
Bill.
Clause
6Account
opening John
Howell (Henley) (Con): I beg to move amendment
38, in
clause 6, page 4, line 10, at
end insert— ‘(4A) An account
provider may not unreasonably refuse to open an account for an eligible
person.’. I
want to probe in a little more detail a subject that we briefly touched
on this morning. As the British Bankers Association website is at pains
to point
out, “no
bank is obliged to open an account for
anyone.” The
situation that I envisage with the amendment is one in which a person
has a notice of eligibility and goes to a bank, which refuses to open
an account. As was hinted at this morning, that could occur if the
bank’s procedures for opening an account are
complex—anyone who has tried to open a bank account recently
will have found out that it is complex and does not portray the good
side of saving. Even the requirement for normal proof of identity may
not be straightforward. For example, utility bills are often in one
partner’s name, rather than both, making it difficult to produce
a utility bill in one’s own name. That may occur for reasons
that are practical, financial, or even cultural, as was also hinted at
this
morning. We
need to have some idea of where the line will be drawn in the
exercising of discretion by the banks. Does the Economic Secretary
envisage that the current general unwillingness of banks to open
accounts for former bankrupts or those who have had county court
judgments against them will be allowed to apply? In themselves, saving
gateway accounts should be a safe bet, but I see from draft regulation
13(5)(c) that he is bringing normal money-laundering requirements to
bear on those accounts. Indeed, banks may be less willing to see those
accounts as safe is there is a feeling that they may be swung into an
individual savings account or some other form of financial instrument
at the end of their life. I heard the Economic Secretary’s
general assurances about that this morning, but I hope that he will
welcome highlighting the more specific concerns about this aspect of
the Bill.
Ian
Pearson: Clause 6 concerns the rules and processes at
account opening, and is designed to ensure a consistent and simple
process for applicants while providing for some basic checks on an
applicant’s eligibility for the saving gateway. I share the hon.
Gentleman’s concern that eligible people should not be
unreasonably deterred from opening an account with their preferred
account provider, the phrase he uses in his amendment. However, I would
be surprised if, having opted to offer saving gateway accounts, an
account provider chose to decline to offer accounts to eligible people
unreasonably, many of whom would be potential new
customers. I
assure hon. Members that we will work closely with potential account
providers and others in the run-up to the launch of the scheme, to
explore how eligible people can most easily access accounts, consistent
with the account providers’ normal account-opening checks.
However, to put the position beyond doubt, subsection (3)
requires account providers to open a saving gateway account for all
eligible applicants, as long as the application is made in accordance
with the rules set out in the Bill and in regulations. Moreover, we
intend to make it a condition of approval to offer saving gateway
accounts that a provider undertakes to accept properly completed
applications from eligible people who have received a notice of
eligibility. That is in the draft regulations. However, those
requirements are subject to certain limited and necessary exceptions,
to be specified in the
regulations. I
hope that hon. Members will agree that it is reasonable that account
providers should not be required to open an account when they have
reason to believe that the notice of eligibility presented is, or may
not be, genuine, that a declaration or application contains matters
that are, or might be, untrue, or when they are unable to satisfy any
requirements of money laundering legislation. As hon. Members can see
from the draft regulations, those are the circumstances in which
we propose that account providers can refuse to open an account for an
eligible person who is prepared to agree to the terms and conditions
under which the account is offered. We would expect them to vary to
some extent between providers. However, I wish to stress that we will
continue to discuss that in detail with potential account providers and
others, and that we recognise that concerns have been
expressed.
Dr.
Ladyman: There was a hint in the evidence
session—although without going through, the transcript I cannot
put my finger on where I got this impression—that some of the
banks might wish to limit the gateway saving accounts to people who
already have some sort of account with them, such as a basic bank
account. Is my hon. Friend saying that they will not be allowed to do
that? One of the banks certainly gave the impression that it would only
market to existing account holders. Does he have a view as to whether
providers should market more widely than their existing customer
base?
Ian
Pearson: From my discussions with the banks, I do not
recognise the hint that my hon. Friend mentions. One of the objectives
of the legislation is to encourage people to start the savings habit.
We do not want to see people who have already been saving simply
transferring savings into a gateway account. People might have bank
accounts in which they have not been saving, and they might then start
to save for the first time. We would
want to encourage that, but one of the purposes of the legislation is to
encourage more people to save for the first time, whether through a
saving gateway account offered by a bank or through one offered by
another financial institution. A variety of provision is
important. 5
pm
John
Howell: The Economic Secretary gave sensible examples from
the regulations. They related to fraud in the forms and the unlikely
event of money laundering being involved. Will he give examples of what
he considers acceptable and unacceptable practices for the
banks’ own systems, which go beyond
that?
Ian
Pearson: In short, we need to have further discussions
with the banks and other providers on this issue. With regard to
amendment 38, it is difficult to see what a general requirement that
account
providers “may
not unreasonably refuse to open an account for an eligible
person” could
add to the approach that we are adopting. It raises questions about
whether a refusal to open an account was unreasonable and what criteria
should be used in reaching that decision, so it would create
uncertainty. We
believe that the approach that we have set out will provide an easily
understood and workable set of rules for account providers. The hon.
Gentleman will find that they have been closely modelled on the child
trust fund regulations. We will, however, want to keep the rules under
review and they would potentially need to be updated by the Government
without primary legislation, which is why the amendment is not
acceptable. In the run-up to the scheme launch, it will be important
for us to continue to work closely with providers and advice-giving
bodies to balance the requirement that opening an account should not be
an obstacle to savers with the need for account providers to carry out
normal account-opening checks on the identity of the applicant and to
receive the assurances that they rightly
expect. This
issue will be the subject of further discussion. If any changes are
needed to the draft regulations, we will consider them at a later date.
As hon. Members will be aware, the draft regulations are subject to the
affirmative procedure. I hope that the hon. Member for Henley will
accept that it would not be appropriate to put the proposed provision
in the Bill and that he will seek leave to withdraw the
amendment.
John
Howell: I am glad to hear that the Economic Secretary
shares my concerns about the issue. I have listened to what he has to
say and I accept his assurances that the matter will be raised again
and will be raised with the banks as we move nearer to the
implementation of the measure. On that basis, I beg to ask leave to
withdraw the
amendment. Amendment,
by leave,
withdrawn.
Mr.
Hoban: I beg to move amendment 30, in clause 6, page 4,
line 11, leave out subsection (5) and
insert— ‘( ) Regulations
shall make provision preventing a person from holding more than one
Saving Gateway account during the person’s
lifetime.’.
The
Chairman: With this it will be convenient to discuss
amendment 7, in clause 6, page 4, line 11, leave out subsection
(5).
Mr.
Hoban: Subsection (5) enables the Government to make
regulations about the number of saving gateway accounts that someone
may hold at any one time, about a gap between the end of the maturity
period of an account and another account being opened and about whether
people can hold more than a specified number of saving gateway
accounts, or saving gateway accounts that are held until the end of the
maturity period, during the person’s lifetime. That is a very
permissive set of
regulations. I
think that the Minister said on Second Reading that people would be
entitled to have only one saving gateway account, and in our evidence
session last week the issue was raised again, particularly with the
people who gave evidence in the morning. Mr. Brian Pomeroy,
who chairs the financial inclusion taskforce, said
that “it
is right that they get only one shot, because the basis of the scheme
is that it should be a kick-start. If it fails, it does not
work”.——[Official Report, Saving Gateway
Accounts Public Bill Committee, 27 January 2009; c. 18,
Q38.] The
sense that we got from his evidence was that he would expect people
only to ever have one saving gateway account, because if they did not
develop a savings culture based on the experience of holding one
account for two years, they were unlikely to develop such a culture by
being given the opportunity to hold a second account or even to be able
to open one in year 1 and a second one in year 2. There was a clear
sense from Mr. Pomeroy that one account should be sufficient
to generate a savings culture. Sharon Collard, who took part in the
evaluation of the first pilot, argued that one account was appropriate
from a different perspective and that simply having one account would
limit the cost to the Exchequer. Amendment 30 would reflect in the Bill
the apparent consensus among those taking a close interest in financial
inclusion that one account is
enough. The
Economic Secretary will perhaps argue, as he has done in earlier
sittings, that he needs flexibility and wants to be able to change his
mind in the light of experience. All those arguments have been well
rehearsed. The Government sent out a clear signal on Second Reading,
and there was a clear signal from the evidence session. This may be one
area where the Minister could be persuaded to set some of the
parameters in the Bill, rather than for ever relying on
secondary legislation. I am not sure whether that is the
thrust of the amendment 7, tabled by the hon. Member for
Taunton. We will hear his arguments in a minute. We need to be clear
how many accounts we expect people to have over their lifespan, and
understand why that is not in the Bill and why has it been left to
secondary
legislation.
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