31/10/2017 House of Lords


31/10/2017

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the House of Commons. We will now be

going over live to the House of

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Lords. Remember you can watch

recorded coverage of all of the

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business of today after The Daily

Politics later tonight.

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I would like to reflect carefully on

all the points he has raised, but I

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don't think this problem is going to

go away Eddie Howe can see it

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increasing. And we have other pieces

of legislation, where I'm already

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becoming aware that claims managers

are looking at new areas of. That

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they are going to fasten on and

exploit. And we have to be prepared

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to deal with that in advance rather

than seeking to catch up, which is I

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suppose what I'm saying we've try to

do for each of the last ten years.

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So, lets move ahead, but in the

meantime I thank my Noble Friend the

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minister for all that he has said.

The amendment is withdrawn. After

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clause 17, amendment number 40.

My

Lords, by leave of the House, I

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begged to move amendment 40 on

behalf of the baroness, who has had

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to leave the Chamber to attend an

unexpected unforeseen family

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problem. I think I can dispatch the

amendment without too much time, but

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it's part of a process. It heals, as

colleagues will see, amendment 40 is

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entitled, new clause to bring in

interim rules strict in charges for

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management services. The government

is through the FC a promoting public

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interest in trying to complete the

applications for PPI claims and

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there is a public interest in that

and there is a lot of advertising

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around, which is encouraging people

to do that. But my Lords as we heard

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during the committee stage there are

a lot of people who are being caught

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up and caused significant coming as

a result of the misselling of PPI,

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particularly in relation to

incurring fees of 30% or sometimes

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more when using a claims management

company, when they could achieve the

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same thing themselves directly from

lenders without charge. Citizens

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Advice Bureau have advised that

almost half of the problems and

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complaints relating to claims

management fees are of that kind,

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namely disproportionate levels of

fees. I've only been involved in the

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margins of this but the baroness I

think has been working intensively

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with the minister and her team, and

that has to be acknowledged. I think

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the baroness has spent a lot of time

trying to make sense of this,

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because it is an interim measure,

but one which is necessary. So, the

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purpose of the amendment, really, is

to seek assurance that there is

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still a possibility of bringing

something forward in terms of a

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third reading and that is is being

worked on. A lot of intensive work

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is being done in that regard and

that is very welcome to know. In the

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gestation of some of the ideas which

are currently in play, I think the

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baroness and myself would like

serious consideration to be given to

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the kind of cap that we are talking

about. I think that some of the

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ideas which are being considered are

around 20% plus fat. And I think if

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that is the case, when we come to

third reading, we can consider it in

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more detail, but actually it sounds

quite high. Both me and Baroness

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Meacher had a technical reason why

perhaps it has to be sent at 20%

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plus fat but the plea in the course

of moving the amendment would be for

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careful consideration of the level

at which the cap may be set. -- plus

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VAT. And finally there are some

suggestions that if a company did

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charge more than the cap allows

under the amendments being

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considered, that would not be a

breach of statutory duty but the

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access would be recoverable, only

the excess. So, the mechanism which

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is being fought about that moment is

difficult to understand as far as

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I'm concerned. The mechanism is not

clear, and if the minister could

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explain why an excess charge would

not be a breach of statutory duty, I

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certainly as a former provincial

solicitor of many years would be

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going to bed this evening in a

happier place if I knew this.

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This is to say that the process that

has been undertaken by the

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ministerial team is acknowledged and

welcome. We've had help on our site

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from Lloyds bank and the sea ABC

this I hope, if the Minister can

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give us some assurance on the

process going forward, that would be

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welcome -- the Cab side. My Lords, I

beg to move.

After clause 17, a new

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clause is printed, amendment 40.

My Lords, we should be thankful for

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this amendment to be taught forward

on the half of Baroness Meacher. It

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looks as though this will be another

issue for us to consider at third

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reading, so I don't propose to dwell

on it extensively now. If that isn't

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the case, it would be good if the

Minister would tell us.

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An interesting point was raised

about when people exceed the cap,

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what is the remedy. Perhaps the

Minister can confirm what the route

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would be, the excess recoverable by

the claimant, rather than by

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something more direct. We look

forward to the Minister's reply on

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this.

My Lords, I rise briefly to

thank the noble Lord Kirkwood for

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moving this on behalf of Baroness

Meacher. On the half of my noble

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friend on the front bench, if in the

considerations of this matter we

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have considered the issue that I did

raise in the committee stage, which

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is supported by a number of consumer

groups, which is to require a

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company that has been found to need

to pay out on a claim to pay the

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claims management fee, rather than

take it out of the actual

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compensation that they argue with a

cap that should also be more

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acceptable, perhaps, but also more

effective for those that do receive

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compensation, as well as encouraging

companies who have mis-sold

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something, or perpetrated harm to

the consumer, to voluntarily contact

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the consumer is harmed, rather than

wait for a claims manager to do so

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on their behalf of the claims

management fee.

My Lords, thanking

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the noble Lord Kirkwood for moving

on behalf of Baroness Meacher, and I

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am sorry she had to leave for family

reasons. I appreciate the work she

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has put into this amendment, is

pursued with diligence. The

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amendment seeks to put in place a

fee cap from two months until the

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FCA implements its own cap, and we

debated this in committee, and I am

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grateful to noble Lords that

contributed to this debate to

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highlight again. Clause 17 makes

great strides to secure prices for

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consumers by giving the FCA a duty

to cap fees, charged in respect of

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financial services claims. However,

as was pointed out during committee

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stage, the Emperor mentation of the

new regulatory regime, and an

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effective robust cap will

necessarily take some time, during

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which, consumers can continue to be

charged disproportionate fees. In

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that debate, noble lords expressed

concerns that the FCA's PPI claims

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deadline may have passed by the time

the FCA's fee cap is put in place, a

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point made by the noble Lord

McKenzie. We know 90% of financial

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services claims relate to PPI, and

we do want to ensure consumers are

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protected against excessive fees the

PPI claims, as soon as possible. And

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that is why, as Lord Kirkwood and

has abated with commendable

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foresight, the government intends to

table an amendment at third reading

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to introduce an interim fee cap in

respect of PPI claims management

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services. The amendment will set a

fee cap at 20%, excluding VAT of the

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claim value, and will be reinforced

by regulators upon commencement two

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months after the Bill received Royal

assent. The M EJ consulted on a 15%

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cap. The claims regulation

management unit conducted that

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consultation. The cost of processing

claims, and also market analysis of

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profit margins

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claims, and also market analysis of

profit margins. This amendment

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supports the government's aim of

ensuring the claims management

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sector works in the interest of

consumers by protecting them from

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excessive fees. The amendment tabled

by the noble Baroness Meacher, moved

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by Lord Kirkwood, will go some way

to ensuring that consumers are

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protected during this interim

period. However, the government

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amendment will go further in two key

areas. Firstly, it will have a wider

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application than that tabled by the

noble Baroness. The interim fee cap

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will apply to CMCs, and legal

services providers that carry out

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claims management services in ratio

to PPI claims, to enforce by the

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relevant regulators. Secondly, it

will include a prohibition against

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charging over 20% of the claim value

for PPI claims, which would enable

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the radiators to implement the cap

quickly. And as I said a moment ago,

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this level was reached due to be

helpful and combines of responses to

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the Matt Rhead -- mystery of

Justice's fee capping regime for

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CMCs handling financial services. On

the procedure for claiming any

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excesses imposed over the cap, if

anyone in breach of the interim fee

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cap will be subject to readily to

reinforcement, which could include

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fines. Furthermore, a contract to

receive or pay a sum in excess of

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the fee cap would be unenforceable,

thereby ensuring that firms cannot

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profit from malpractice. Consumers

are entitled to recover excessive

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fees. My noble friend, Baroness

Altman, raised a question about

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compensation. As we are going to

revert to this issue again on third

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reading, perhaps we can deal with

that particular issue then. Can I

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finally make it clear that the

interim cap is intended to be a

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temporary measure, and will only

apply once the FCA has implemented

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its rules under clause 17. It will

only apply to PPI claims, when the

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cap comes in, it will apply to all

claims relating to financial

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products and services. The FCA, as

the incoming radiator, will be

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placed to develop its own cap based

on assessment and market. Given the

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government's undertaking to table an

amendment on this matter at third

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reading, I hope the noble Lord is

able to withdraw the amendment.

I am

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very happy with that undertaking, I

hope the dialogue can continue, and

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I begged leave to withdraw the

amendment.

The amendment to be

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withdrawn.

I rise to move amendment 41, though

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in doing so, I am somewhat nervous

coming hot on the heels of amendment

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39 with being a member of the noble

lords flock in your lordship's

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house, I am concerned that if I

overly push on amendment 31, I, May,

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too, be the victim of whiplash. We

discussed many of the issues in

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committee. I have brought the

amendment back at report stage. I

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want to push my noble friend to

understand the timeline for the

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process for bringing in a duty of

care, both in the general and

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specific the intention of the Bill

was to put an amendment down for a

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general duty of care on financial

institutions. As a result of the

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scope of the Bill, a specific duty

as set out in my amendment,

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pertaining to CMC's is what we are

discussing this evening. I am

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grateful to all of the organisations

who helped with briefing for this

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amendment, not least again MacMillan

Cancer Support, who really

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demonstrate what a modern charity

can do, not just focusing on the

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specific at the centre of their

organisation, but going wider to all

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of the elements that directly affect

people when they receive a cancer

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diagnosis. And it's part of the

reason why I chose to focus on

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Macmillan and cancer in putting this

amendment down. It goes to the heart

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of bringing to life why there is a

need for a general duty of care to

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be exercised by financial services

institutions when one in two of us

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will receive a cancer diagnosis in

our lifetime. This isn't a marginal

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matter, it demonstrates that

financial institutions, not just

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have all of the current

responsibility and obligations upon

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them, but really need to have that

general duty of care. As I say, the

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amendment before us this evening is

in a specific with CMCs. I push my

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noble friend, the Minister, to

accept the amendment as set out, and

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also to give some further

description, building on comments

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that my honourable friend made at

committee stage. On the timeline,

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consider bringing forward and

implement a general duty of care,

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with obviously the good offices of

the FCA involved, and I am grateful

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to the FCA for meeting with me to

discuss this, not least Mr

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Christopher were lard. I will say no

more, the arguments were put forward

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at committee stage. I urge my noble

friend to accept the amendment as

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set out, and I beg to move.

Certain

new clauses printed, amendment 40

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one.

My Lords, can I congratulate

Lord Holmes of Richmond, for

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sticking with this issue, because it

is fundamental. If I can say to the

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government, a duty of care is so

important, it should be so central

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to every piece of our financial

services industry that we shouldn't

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let the perfect, having a general

duty of care, be the enemy of the

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good, which is an opportunity to put

in a specific duty of care in this

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particular Bill. I hope the

government will consider that. My

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lords, I have the privilege to be on

the government commission on

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banking. That is to expose a lot of

misdirection within the financial

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services industry. I think

everybody, not only on the

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committee, but far more broadly,

agreed that the problem lay in

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culture. We have termed the banking

industry and the financial services

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industry, and asked it through

various bodies, to improve its

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culture, but surely, we also have an

opportunity to drive that with every

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legislation peace that comes our

way. Duty of care reflects that

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whole cultural approach, the

underlying, underpinning approach

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that we expect our financial

services to take, where the customer

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is at the centre, where the

interests of the customer are at the

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centre. It is not that financial

services can't make profits, that is

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the business they are in, but never

at the expense of that central

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interest of the client or customer.

So I really would urge the

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government to take seriously this

opportunity to make sure that in an

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area where there has been

extraordinary abuse, and I think so

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many of us, others talking about

whiplash to the kind of issues that

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have been raised around holiday

sickness. I mean, in issue after

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issue, we have seen a complete

failure in the culture of bodies

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providing those kinds of services.

So tackling that issue head on, not

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being afraid to use language that

clearly is around that duty of care,

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not considering it too soft or too

difficult, but I think it all should

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become a habit. We had to make sure

that in every piece of legislation

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that this particular issue is

underscored. This piece of

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legislation could be built up.

My

lords, we have added our name to the

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amendment, together with Baroness

Karina, which takes us back to

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regulatory principles and the duty

of care. The noble Lord is right to

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have removed the where appropriate

qualification from his early

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amendment.

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