---

Financial Services and Markets Bill [HL]

My Lords, I will speak briefly in general across this set of amendments and specifically to Amendment 141 in my name, supported by the noble Baroness, Lady Altmann.

In the general remarks, I say to the noble Lord, Lord Holmes, that I am excited and thrilled by his amendments in this group and I support every one of

them—I would even open champagne; I am that pleased. I say to my noble friend Lady Tyler that I totally support the amendments that she has introduced here. I share with both of them the perception that financial inclusion is absolutely at the core of the requirement that we must place on our financial services sector and on the regulators that deal with it.

To pick up on a point that my noble friend Lady Tyler made, the consumer duty does not deal with financial inclusion, and that is exactly right. The consumer duty is very much a protection against mis-selling. It is not a duty of care, which could indeed have required that gaps left in the market are filled and the regulator take steps to fill them; the regulator was absolutely determined not to have that responsibility when this House attempted to make it address the issue, and the Government of the day were also very determined that the regulator should not play that role. We cannot look to the regulator to be a key player in financial inclusion.

In the five-year strategy of the FCA—I really have read that document—there is reference to financial inclusion; in fact, it is in big, black, bold letters. The problem is that what it anticipates as the role that it will play is to try to address how low financial capability holds people back from accessing financial services and how it could support them in managing their financial life. That is important and it matters, but the reality is that for many people who are excluded, the way to give them support is not to try to get them digital—it would be brilliant if you could but that is not the reality—but to deal with those people as they are in the world that they live in. There is absolutely no reference in this five-year strategy that you could in any way interpret as related to what has become the Richard Lloyd review—to things such as banking hubs. It is focused solely on the individual, whereas issues that we have addressed in previous groups have also been about the financial exclusion of small businesses from financial services. There is no reference to any of that.

I have had so many conversations with the FCA over the years, and it has said things like, “Yes, if we had a set of community banks, that would be absolutely brilliant; CDFIs are absolutely wonderful—not our job. If they appear, we will make sure that we regulate them appropriately, but it is not our job to fill that gap and we resolutely hold to that position”. That clarity needs to be here in this debate. I will not repeat what has been said because it was so well said by the three previous speakers, but I very much hope that the Minister will pay serious attention to this issue. From things that he has said in the past, I hope that he takes it to heart. It very much belongs in a very central way in primary legislation.

The issue I am raising is perhaps not an obvious one to raise in the context of this Bill, but it is in scope. It is dear to my heart, but I think it is widely supported. I am using this opportunity to deal with an issue that, frankly, the Government should have dealt with without any problem. It is child trust funds and the ability of young adults with learning difficulties to access those funds that sit in in their name. My party leader, Ed Davey, who, as I think all in this Committee know, has a son with very severe learning difficulties, has written of his eight-month battle to access the child

trust fund put in place and invested in for the benefit of his severely disabled son, who is now 18. The fund should be easily accessible when a child turns 18, but, as the Davey family found out the hard way, this is not true for children with learning or other disabilities who lack the capacity to fill in the forms themselves.

The process of applying to the Court of Protection for a deputyship order is Kafkaesque, consumes endless time and places such a burden and cost that many parents give up altogether. The many steps, and my goodness there are many, include obtaining written permission from three different relatives to demonstrate that you are unlikely to abuse the funds that you will access, and obtaining various doctors’ assessments—well, perhaps that is fair—but then the courts kick in. The Court of Protection charges £412 for a deputyship order. It requires you to obtain insurance against misuse, and the Davey family found that that cost £48. Then comes the Office of the Public Guardian, which charges £100 for its assessment, and it then levies an annual supervision charge of £320. If you add this up, it basically becomes £1,000 to be able to access a child trust fund for your severely disabled child.

What is really extraordinary is that most child trust funds do not have a lot of money in them. I think the average amount is £2,000. You would have to spend 50% of it to be able to access that fund for your child. The people accessing it are parents whom the DWP already relies on to deal with a variety of much more significant pots of money to support that child. I use the Davey family not to ask for any kind of sympathy, but here is an MP whose wife is a lawyer, and they cannot work their way through this maze. How are people without those kinds of expertise going to work their way through this system?

Unfortunately, there is a new legal offering from specialists who will, for a significant sum, offer to negotiate the way through for you. That is a practice that none of us wants to encourage. There are a few child trust fund managers who handle the process a bit better and have been helping some of the people whose funds they manage to minimise the process, but it is a lottery in terms of finding that you have taken out your child trust fund with an entity that takes that approach. Charities estimate that 80,000 to 123,000 young adults are essentially locked out of their child trust funds.

I tried to look for what response the Government have been making to the overtures of the charities and other civic society groups that have been out there trying to speak for these youngsters. Two things came to my attention. The only response I could find from the Department of Justice was that it has now digitised the application form and provided a guide.

My amendment would force the FCA to simplify the whole process for CTFs paying out under £5,000 in any one year. It is formulated around an amendment put before the House in 2021—I am pretty sure that is the correct year—by the noble Lord, Lord Young of Cookham, who is really skilled in developing, designing and presenting the appropriate amendments. In speaking to that amendment, the noble Lord, Lord Blunkett, who was the Minister when child trust funds were put in place, made it very clear that no one had thought of this particular set of problems and that that was why the system was designed in a way that set up this

obstacle course. It was not intentional or planned; it was simply a failure to recognise what could happen and has in fact happened.

I say this to the Minister: all the arguments we hear in support of the Bill are about deregulation; here is a piece of deregulation that I think no one could argue with, and which I would definitely and clearly support, as would my party and, I suspect, many others. If the Minister cannot control this himself, could he please go away and berate his colleagues? These youngsters need to be able to access their funds. We are talking about small pots. Simply digitising the 106 sections of the application form is not the answer.