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Lords Hansard text for 1 Feb 201001 Feb 2010 (pt 0001)
Asked By Lord Dykes
The Financial Services Secretary to the Treasury (Lord Myners): Everyone in the country will benefit from better banking services. The Government are taking action in the areas identified by Which?. For example, the Financial Services Authority has introduced new business conduct rules for retail banking with effect from 1 November 2009. A review of the sale and distribution of retail savings and investments is addressing structural problems in how products are sold. Work is under way to improve standards of complaints handling. These and other measures to improve the customer experience support the campaign of Which? and will help to restore trust in the banking service community.
Lord Dykes: I thank the Minister for that response. I assume that the Government will be present at or at least encourage the meeting on 4 February, when the public will be further consulted by Which?. In the mean time, are the Government convinced that the banks have at long last learnt a few lessons and will really try to help personal customers and SMEs come out of this recession?
Lord Myners: I am sure that the Government will encourage the event on 4 February, and we are delighted to see Which? sponsoring this inquiry. I and other members of the Government will give evidence.
As for the need for the banks to focus on the needs of customers, I can do no better than to quote the noble Lord, Lord Roberts of Conwy, in his contribution last week, when he talked of the need to put the customer back at the centre of the banking relationship. The banks are beginning to appreciate this and understand that sustainable growth and strength is best achieved by meeting the needs of their business and private customers and moving away from esoterica and the creation of toxic instruments, which may have appealed to those with a strong mathematical background but were really quite distant from servicing the needs of the economy. The noble Lord, Lord Roberts of Conwy, had the right message for all banks: focus on the needs of your customers and, if you do that, your business will prosper.
Lord Newby: The Minister expressed his support for Which?. Does that mean that when the Financial Services Bill comes to your Lordships' House, the Government will support the amendments that Which?is promoting on credit cards-for example, on unsolicited limit increases and to ensure that the most expensive debts are automatically paid off first, not last?
Lord Myners: I thank the noble Lord, Lord Newby, for his question. I have not studied in detail the submissions of Which? in connection with that Bill, which will come to your Lordships' House fairly soon, but there are provisions in the Bill that deal with unsolicited credit cheques, which have been the bane of many people on low incomes, who are tempted to cash these cheques and move into debt in a way that is unwise. No doubt, we will also look at details around the charging regime for credit and debit cards.
Baroness Noakes: My Lords, Which? refers to the increasing and unhelpful consolidation of banks-some of which, of course, happened with the connivance of the Government when Lloyds took over HBOS. Do the Government accept that there is insufficient competition, which operates, as Which? claims, to the detriment of consumers?
1 Feb 2010 : Column 3
Lord Myners: The primary cause of the increased concentration of banking was of course the move to undermine the mutuals by encouraging them to demutualise, and I believe that that was done not by this Government but by a previous one. To be more constructive, though, as I know the noble Baroness would always wish me to be and as I always seek to be, we welcome the arrival of new competition in high street banking, as we have seen with the recent announcement from Virgin, with Tesco's significant commitment to become a major force in retail banking-we know how successful that organisation can be when it puts its might behind commercial success-and with the disposals that are to be made by the Royal Bank of Scotland and Lloyds bank. We see an expectation of stronger competition. I agree with the noble Baroness, however, that it would be good for the economy if there were more competition in the banking sector, and the Government will make efforts to facilitate that.
Lord Tomlinson: Does my noble friend agree that for many people-particularly, but not exclusively, poor people-banking services can best be provided by the development of credit unions? Are the Government now happy, following the initiative that he took in writing to the British Bankers' Association, that banks are adequately playing their role in promoting credit unions?
Lord Myners: I share my noble friend's great support for credit unions; he has devoted much time, energy and influence to promoting the case for growth in their activities. After a recent debate in this Chamber I made contact with the major banks and their trade association to encourage them to make further support available for credit unions, both through funding and through seconding employees so that they share knowledge and access to systems. I think that the banking sector would be wise to see this as an opportunity where, again, it can address some of the reputational and trust issues that the industry currently faces by showing a willingness to support credit unions, which do so much good in taking banking services to the previously unbanked.
Lord Campbell of Alloway: How do the banks propose to support the interests of ordinary customers who cannot receive more than about 0.5 per cent on a deposit account?
Lord Myners: Interest rates are set by the Monetary Policy Committee. Low interest rates are entirely right for supporting economic activity, but I appreciate that these rates are very low for those who depend upon their savings for their income in retirement. This will require imaginative solutions from the banking sector. We know that the retail banking interest rate market is very competitive-there are plenty of products on offer now with interest rates of over 4 per cent-but this morning, together with the shadow Chief Secretary, I attended a launch by the Stock Exchange of a new facility to make access to corporate bonds more attractive for retail savers. There need to be market-based solutions to that issue as well.
Asked By Lord Dykes
- To ask Her Majesty's Government what is their response to the Consumers' Association's campaign to improve banking services for customers.
The Financial Services Secretary to the Treasury (Lord Myners): Everyone in the country will benefit from better banking services. The Government are taking action in the areas identified by Which?. For example, the Financial Services Authority has introduced new business conduct rules for retail banking with effect from 1 November 2009. A review of the sale and distribution of retail savings and investments is addressing structural problems in how products are sold. Work is under way to improve standards of complaints handling. These and other measures to improve the customer experience support the campaign of Which? and will help to restore trust in the banking service community.
Lord Dykes: I thank the Minister for that response. I assume that the Government will be present at or at least encourage the meeting on 4 February, when the public will be further consulted by Which?. In the mean time, are the Government convinced that the banks have at long last learnt a few lessons and will really try to help personal customers and SMEs come out of this recession?
Lord Myners: I am sure that the Government will encourage the event on 4 February, and we are delighted to see Which? sponsoring this inquiry. I and other members of the Government will give evidence.
As for the need for the banks to focus on the needs of customers, I can do no better than to quote the noble Lord, Lord Roberts of Conwy, in his contribution last week, when he talked of the need to put the customer back at the centre of the banking relationship. The banks are beginning to appreciate this and understand that sustainable growth and strength is best achieved by meeting the needs of their business and private customers and moving away from esoterica and the creation of toxic instruments, which may have appealed to those with a strong mathematical background but were really quite distant from servicing the needs of the economy. The noble Lord, Lord Roberts of Conwy, had the right message for all banks: focus on the needs of your customers and, if you do that, your business will prosper.
Lord Newby: The Minister expressed his support for Which?. Does that mean that when the Financial Services Bill comes to your Lordships' House, the Government will support the amendments that Which?is promoting on credit cards-for example, on unsolicited limit increases and to ensure that the most expensive debts are automatically paid off first, not last?
Lord Myners: I thank the noble Lord, Lord Newby, for his question. I have not studied in detail the submissions of Which? in connection with that Bill, which will come to your Lordships' House fairly soon, but there are provisions in the Bill that deal with unsolicited credit cheques, which have been the bane of many people on low incomes, who are tempted to cash these cheques and move into debt in a way that is unwise. No doubt, we will also look at details around the charging regime for credit and debit cards.
Baroness Noakes: My Lords, Which? refers to the increasing and unhelpful consolidation of banks-some of which, of course, happened with the connivance of the Government when Lloyds took over HBOS. Do the Government accept that there is insufficient competition, which operates, as Which? claims, to the detriment of consumers?
1 Feb 2010 : Column 3
Lord Myners: The primary cause of the increased concentration of banking was of course the move to undermine the mutuals by encouraging them to demutualise, and I believe that that was done not by this Government but by a previous one. To be more constructive, though, as I know the noble Baroness would always wish me to be and as I always seek to be, we welcome the arrival of new competition in high street banking, as we have seen with the recent announcement from Virgin, with Tesco's significant commitment to become a major force in retail banking-we know how successful that organisation can be when it puts its might behind commercial success-and with the disposals that are to be made by the Royal Bank of Scotland and Lloyds bank. We see an expectation of stronger competition. I agree with the noble Baroness, however, that it would be good for the economy if there were more competition in the banking sector, and the Government will make efforts to facilitate that.
Lord Tomlinson: Does my noble friend agree that for many people-particularly, but not exclusively, poor people-banking services can best be provided by the development of credit unions? Are the Government now happy, following the initiative that he took in writing to the British Bankers' Association, that banks are adequately playing their role in promoting credit unions?
Lord Myners: I share my noble friend's great support for credit unions; he has devoted much time, energy and influence to promoting the case for growth in their activities. After a recent debate in this Chamber I made contact with the major banks and their trade association to encourage them to make further support available for credit unions, both through funding and through seconding employees so that they share knowledge and access to systems. I think that the banking sector would be wise to see this as an opportunity where, again, it can address some of the reputational and trust issues that the industry currently faces by showing a willingness to support credit unions, which do so much good in taking banking services to the previously unbanked.
Lord Campbell of Alloway: How do the banks propose to support the interests of ordinary customers who cannot receive more than about 0.5 per cent on a deposit account?
Lord Myners: Interest rates are set by the Monetary Policy Committee. Low interest rates are entirely right for supporting economic activity, but I appreciate that these rates are very low for those who depend upon their savings for their income in retirement. This will require imaginative solutions from the banking sector. We know that the retail banking interest rate market is very competitive-there are plenty of products on offer now with interest rates of over 4 per cent-but this morning, together with the shadow Chief Secretary, I attended a launch by the Stock Exchange of a new facility to make access to corporate bonds more attractive for retail savers. There need to be market-based solutions to that issue as well.
