My Lords, I move Amendment 26 on behalf of my noble friend Lord Stevenson of Balmacara and myself. In doing so, I draw very much on my experience on the Financial Services Consumer Panel, but also, I regret to say, on countless examples since, when we have witnessed financial institutions acting in breach of any fiduciary duty towards their customers and in ways that are highly prejudicial to the whole of the UK’s financial stability and reputation. Most recently, as we saw last week, the FCA had to impose £1.1 billion of fines for manipulation of the foreign exchange market. Exactly in whose interests were those banks working? It was not the interests of individual customers nor, indeed, of the totality of customers.
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We also recall interest-only mortgages, self-cert mortgages, high loan-to-value mortgages, high loan-to-income mortgages, interest rate swaps, LIBOR, PPI and endowment mortgages. It seems not just once a decade but every year that those who feel like making
money out of others find a new wheeze. Those products were sold to people without putting their interests first and, indeed, in many cases in the full knowledge that, should circumstances change, those people would have no way of repaying their loans. Amendment 26 seeks to ensure that financial services have a duty of care to their consumers. It is, of course, a fundamental right of consumers that those handling their money should have to put their interests first.
It really is no good for the Government to claim that banks are already subject to fiduciary duties and regulatory obligations, as they did when they rejected our attempt to write this fiduciary duty into the Financial Services Bill, saying that it was not needed because it was already law. Since then, of course, we have seen these latest fines, and now we risk seeing people trying to get pensioners to unlock their savings, not always in their own interests. Whatever the law says about fiduciary duties and obligations seems to be ignored. That is why it needs to be in the Bill.
Sadly, banks do not always act in the consumer’s interest. They do not always treat customers fairly. The size of the penalties is testimony to that. This disregard of the consumer is bad for the individual consumer and it is one reason that confidence in this sector remains dangerously low. We should grasp this opportunity to improve standards in financial services and make it clear to consumers what their rights are. We need this to be set out in the Consumer Rights Bill, which is where a consumer would look to ascertain what they might expect from a provider. I beg to move.