My Lords, I congratulate my noble friend Lord Stevenson on putting forward this amendment —and, indeed, my noble friend Lord Tunnicliffe, who has taken his place today. As we discussed at some length on the previous amendment, self-regulation has been attempted in the field of debt management, but with only questionable effect. Multiple debtors can, of course, be tremendously assisted by debt management companies arranging how the debts can be paid off over a period in amounts that the debtor can afford. The debtor often cannot manage their cycle of debt sufficiently, so needs assistance. Some commercial operators have sought as best they can to raise their game, but only last week, the Office of Fair Trading decided to revoke the licence of First Step Finance, a member of the Debt Resolution Forum, which runs one of these debt management self-regulation schemes. I expect that responsible operators—they do exist—and consumers would benefit a great deal from a regulatory structure under the aegis of the Financial Conduct Authority in the new legislation.
In Committee, I made an intervention about debt management that I followed up with a letter to the Minister setting out my concerns. I had an extremely helpful response from him. He pointed to the powers that the FCA will have in 2014 to make rules of conduct on matters falling under its remit. In his letter, the Minister said:
“The FCA could, for example, impose restrictions or requirements on debt management plans where it considers that such rules are necessary or expedient to advance the consumer protection or competition objectives … Under the new regulatory regime, the Government will look in the first instance to the FCA as an independent and expert regulator able to put in place the right framework for debt management plans”.
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As I understand it, the Minister would like us to leave it at that at this point. I can understand, but not necessarily agree with, the Government’s reluctance to put anything in this area in the Bill. However, the Minister could take advantage of this debate to put on the parliamentary record a useful clarification that FCA rules should require, for example, that fees charged by debt management companies must be reasonable and not excessive, as currently is seen in the marketplace, and that they should not be front-loaded. I would also argue that FCA rules in this area should specify that any advice given by debt management companies to vulnerable consumers should be subject to rigorous, independent and regular audit.
Anything that the Minister feels able to say today would give an important steer to those who in due course will have to draft the product rules that the FCA will produce. I think the points that I have suggested merit such inclusion.