My initial response is that if the gap is indeed not closed, it is one of the objectives of the FCA to address that. I was just quoting that it has to have regard to,
“the ease with which consumers who may wish to use”,
financial,
“services, including consumers in areas affected by social or economic deprivation, can access them”.
If it is not responding and ensuring access, that is a case not for giving that responsibility to another body but for holding the FCA to account to get it to discharge the responsibilities that we have given it.
The FCA takes its objectives very seriously, and has undertaken several pieces of work in recent years to increase access and protect consumers, including a report on consumer vulnerability in February 2015. To give one example, in June this year, the FCA published a call for input on access to insurance,
following a broader report on access to financial services that it published in May last year. The call for input seeks views on the challenges that firms face in providing travel insurance for consumers who have or have had cancer and the reason for pricing differentiations in quoted premiums.
I look forward to seeing that work develop, and I encourage all relevant stakeholders to provide responses to the call for input. It is important work and, in response to the noble Baroness, is an example of the sort of project to promote financial inclusion that the FCA can conduct in its role as industry regulator.
Against that background, I urge the noble Lord, Lord McKenzie, to withdraw Amendment 19 and not to press Amendment 39. I am grateful for the opportunity to address the important topic of financial inclusion, to which I am sure we shall return, but, as I said a moment ago, the Government are concerned that the amendment could create confusion between the roles of the FCA, on the one hand, and of the SFGB, on the other.
I turn to Amendment 25, which makes provision for the new body to advise the Secretary of State on the role of Ofsted and the primary school curriculum. I am aware that the Lords’ Select Committee on Financial Exclusion made a similar recommendation on the role of Ofsted and the primary school curriculum in its recent report. We will of course respond to each recommendation in due course and give them the close attention that they deserve but, for the time being, I just comment that the Government believe that this amendment could cause confusion about the remit of the new body with regard to the school curriculum.
As was stated earlier, the new body will have a role to help co-ordinate and support initiatives delivered by charities and other parties which are designed to improve the financial education of children and young people. It will be able to identify gaps in provision, identify best practice, and work with schools to understand how they are delivering financial education, in which lessons that is taking place, and explore further the barriers to school involvement. The Government are clear, however, that the school curriculum and monitoring of school performance is a matter for the Department for Education in England and those of the devolved nations.
In practice, this means that the body will be able to undertake activities to help schools to provide financial education. For example, the body will be able to undertake activities such as funding the project undertaken by the Money Advice Service and the Education Endowment Foundation to run a trial of Young Enterprise’s Maths in Context programme. Some 12,000 pupils in 130 English schools will take part in the trial, testing whether teaching maths in real-world contexts improves young people’s financial capability and attainment in GCSE maths exams.
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On Amendment 22 in more detail, it would require the body to report on progress in addressing financial exclusion. I note that an annual report on progress in tackling financial exclusion was a recommendation of
the Lords’ ad hoc Select Committee on Financial Exclusion; we will respond to the report shortly. I understand the point that noble Lords are making with the amendment, but I reiterate my concerns regarding the use of the term “financial inclusion”. As I have said, the body is designed to build financial capability by providing information, guidance and advice so that members of the public are equipped with the tools they need to handle financial matters. To take on board what my noble friend Lord Trenchard said, it is for this reason that capability is enshrined in the body’s strategic function rather than financial inclusion, which is better tackled by central government working collaboratively with the Financial Conduct Authority as the industry regulator. The present amendment creates a possibility that the new body will duplicate work undertaken within central government and by other public bodies but perhaps less effectively, as it will not have the any powers to regulate or enforce activities.
Amendment 22 also sets out the actions that the new body must take as part of a national strategy to improve financial inclusion. For instance, it places a requirement on the body to work with banks and other financial institutions to ensure that hard-to-reach groups are able to access financial advice and guidance. I reassure the House that Clause 2(7) makes it clear that the body must work with others in the financial services industry, including banks, as well as the devolved authorities and the public and voluntary sectors to support and co-ordinate the development of a national strategy to improve the financial capability of the public. We have seen organisations, both private and public, which have failed in their delivery because they were stretched too thinly or trying to operate without the necessary powers or influence. The body has an important task in improving financial capability by providing information in the United Kingdom—in response to the noble Lord, Lord Kirkwood—as well as guidance and advice, so that members of the public are equipped with the tools that they need to handle financial matters. It should not be distracted from that significant and important challenge. I am aware that one amendment is focused on prioritising front-line services to improve delivery. Some of the amendments before us risk diverting the attention of the body, and its resources, from its prime task.
I turn to the important issue of mental health conditions, which a number of noble Lords mentioned. The Prime Minister has expressed her commitment to helping those with mental health conditions, and in January set out a range of measures to improve mental health services. In addition, the FCA has increased its focus on people with mental health conditions and held a TechSprint event on this theme in March. Over 100 developers, mental health and technology experts and around 32 organisations took part, and there was a strong focus from all teams on designing concepts that encouraged people to continue to manage their own finances but put in place safeguards to help them when they felt they needed it most. We welcome that work and are pleased that the FCA is facilitating increased industry engagement so that appropriate products and services are available to people with mental ill-health. I reassure noble Lords that the body’s
money guidance and strategic functions enable it to provide help to those with mental health conditions, so that they engage with the financial sector and its services.
I take to heart the point made about aggressive online behaviour, calls at anti-social hours to people who are vulnerable, and potential financial coercion. I take on board the need to monitor this and have an appropriate response. The Government’s view is that the body’s functions are sufficiently broad to allow it to take appropriate action in this space, as noble Lords have identified, and we look forward to seeing it work with the industry and the voluntary sector on this important matter.
Finally, Amendment 22 requires the new body to conduct an annual review of the impact of the Welfare Reform Act 2012 on financial exclusion. The noble Lord, Lord McKenzie, made some critical comments about our progress on welfare reform. Universal credit is designed to mirror the world of work and the evidence so far is clear that, under UC, people are moving into work and staying at work for longer than under the old system. I understand the object of the amendment, which is to make sure that the Government’s policies are monitored, but I have to say that I do not think it should be the work of this body to assess the impact of legislation. If I may say so to the noble Lord, Lord Kirkwood, nobody did this better than he did when he was chairing the Select Committee on Work and Pensions in another place.
In relation to the Welfare Reform Act 2012, the Government already have evaluation mechanisms in place. For example, the universal credit evaluation is a comprehensive programme of analysis designed to tease out the economic, social and behavioural impacts of the programme. Research and analysis are conducted to provide continuous tracking and inform the evaluation and the expansion of UC, focusing specifically on the effects that it has on both claimants and staff experience, behaviours and outcomes. That programme is externally assured by a panel of experts drawn from a number of UK and US academic research institutions. In addition, evaluation outputs are routinely published and provide an important and analytically robust evidence base for external observers. The department will continue to conduct extensive research, evaluation and analysis of individual reforms, which will be published in line with professional protocols.
I will try to respond to some of the issues raised during the debate with some in-flight refuelling. The Government recognise the importance of enabling access to financial services among older people. Issues regarding access and vulnerability are at the core of the FCA’s mission and business plan, with the FCA due to undertake a number of projects, including its ageing population strategy, which will be published in the autumn—we may come on to the strategy in a later amendment.
On gaps in the market, the Government have the ability to ensure the availability of products. We have seen the example of what the Government did on flood insurance when there was a clear gap in the market for those living in flood plains who would not get insurance. The Government intervened in the market
in order to make sure that an appropriate product was available. I am assured that the responsibilities of the devolved authorities are very clear. In many cases, the Bill makes it clear that the SFGB has to work with the devolved authorities and public and voluntary sectors where responsibility rests with them. For example, debt advice is already done by the devolved authorities.
I apologise for a somewhat lengthy response but noble Lords have raised some really important issues. I hope that the explanation I have provided will explain why we are concerned about the relationship between financial inclusion and financial capability. These proposals would greatly expand the function of the SFGB and risk causing duplication and confusion over the role of other public institutions. On that basis, I ask the noble Lord to withdraw his amendment.