Welfare Reform Bill

Indeed. I revert to the amendment. Although I ask that it be withdrawn, I appreciate that it seeks to ensure that any individuals who are refused an external provider social loan have recourse to some form of review. It is our intention that any external provider of social loans will have a complaints procedure. This would be made clear in our invitation-to-tender documentation and would be one of the key criteria to be met by any successful bidder. Any likely candidate to take on this work would be regulated by the FSA and customers would also have the option of complaining to the Financial Ombudsman Service. However, there would be a complaints procedure as well. External provider social loans should be very different from the current Social Fund loans. We want to harness the innovation and expertise available outside government to help customers with money guidance and provide access to other financial products such as current accounts and loans. This amendment would place the additional requirement upon these external providers of building an appeals process for those refused a loan, rather than allowing the provider to apply any existing complaints processes, where it has them, including recourse to the services of the financial ombudsman. Such action could well make any contracts less attractive to providers or could result in higher costs. It could also make these loans much less like mainstream financial services products than lenders typically provide, and which we want customers to be able to move to over time. We are clear that it is important that any provider has a transparent complaints procedure. Therefore, as mentioned already, this will be a key part of any contract in addition to other important requirements, such as who will be eligible for these loans, how they will be repaid and what type of criteria lenders will apply to determine whether a loan should be granted. Together we believe this will provide adequate protection to customers applying for these external provider loans, without placing unnecessary and costly burdens on providers that would make it difficult for this policy to work effectively. In short, I believe the amendment would restrict the service which we aim to construct. Finally, we come to the question of whether Clause 16 should stand part of the Bill. Clause 16 enables us to restrict the provision of Social Fund loans in areas where external provider social loans are available, as set out in Clause 15. In geographical areas where we put arrangements in place for the provision of external provider social loans, we need to restrict the availability of loans via the Social Fund so that there is not double provision for the same people. I think that the noble Baroness acknowledged that point. Clause 16 allows us to make these restrictions to the Social Fund. The intention is not to remove access to loans but to create a new system of loans by external providers. People who might currently apply to Jobcentre Plus for a budgeting loan, for example, would instead apply to the external provider for a loan. We envisage that some people will still be able to apply for a Social Fund loan where, for example, legislation or best practice means that an external provider is not permitted to lend to the applicant—for example, because he or she is under 18. If we did not restrict the availability of Social Fund loans in these circumstances, there would be two parallel schemes. Given that we want o avoid giving a customer two loans for the same purpose or two loans at the same time, both Jobcentre Plus and the external provider would need to check with each other to establish whether they had already provided a loan for the same purpose. This would have administrative costs for both Jobcentre Plus and the external provider. It would also introduce confusion and delay for customers if they did not know which organisation to approach in the first instance. One of the key drivers behind the provision of loans by external providers is to increase financial inclusion by improving access to mainstream financial institutions and having access to other services, such as budgetary advice, which cannot be provided by Jobcentre Plus but can be provided by an external provider. I am sorry if I have spoken a little too long on this amendment, but I hope that in doing so I will have persuaded noble Lords that—