Thank you for the opportunity to speak in support of the LCM, convener. The Financial Guidance and Claims Bill makes provision for establishing a new financial guidance body, including provisions on cold calling and a debt respite scheme; the funding of debt advice in Scotland, Wales and Northern Ireland; and the regulation of claims management services.
The bill’s overarching focus is on ensuring that members of the public are able to access free and impartial money guidance, pensions guidance and debt advice. It also has an access to justice purpose, ensuring that members of the public are able to access high-quality claims handling services by strengthening the regulation of claims management companies.
The bill enables that in two ways. First, it creates a single financial guidance body, or SFGB, and makes provision for the funding of debt advice in the devolved Administrations. Secondly, it transfers claims management regulation from the claims management regulation unit in the Ministry of Justice to the Financial Conduct Authority.
The bill also makes provision for two connected purposes: the creation of a debt respite scheme, also known as a breathing space scheme, through regulations; and the introduction of a ban on cold calling through regulations.
The SFGB will replace three publicly funded services that are currently provided by the Money Advice Service, pension wise and the Pensions Advisory Service. It will be responsible for delivering debt advice in England and money guidance and pensions guidance across the UK. The provision of debt advice has already been devolved, and the bill devolves the levy funding that is associated with that debt advice provision. Those moneys are gathered from an existing levy on the financial services sector under the Financial Services and Markets Act 2000. However, under the terms of the new funding formula for devolved levy funding for debt advice provision in Scotland, the Scottish Government has negotiated an improved allocation that will ensure that Scotland’s share takes account of our adult population share and the levels of indebtedness in Scotland. Accordingly, without the LCM, the provision for levy funding for that advice provision would not be devolved to Scotland, meaning that the existing, less favourable, financing arrangements would continue to apply.
As outlined in the legislative consent memorandum, other provisions under part 1 of the bill will have a bearing on Scotland. For example, it talks about the
“statutory objective on the SFGB to work closely with the Scottish Government on the provision of information, guidance and advice”
and the requirement on the SFGB
“to work with the Scottish Government in co-ordinating the development of a national strategy to improve: the financial capability of Scottish citizens”
and
“their ability to manage debt ... as well as the provision of financial education to children and young people”.
Beyond the specific core functions of the SFGB, the Scottish Government has also obtained agreement on certain wider principles that shall apply in respect of the new body. First, it must take greater account of differences in the money and debt advice landscape in Scotland to ensure that available resources are pooled effectively, delivering a more holistic and joined-up advice landscape. It must also establish a committee with membership drawn from representatives from each of the devolved Administrations, thereby embedding the Scottish Government in its governance arrangements, providing the Scottish Government with influence and ensuring that collaborative working is achieved in practice across money and pensions guidance. Finally, it must be capable of channelling funding in a way that best ensures effective oversight and co-ordination or delivery of debt advice in light of the devolution of levy funding.
Part 2 of the bill extends the regulation of claims management companies by the Financial Conduct Authority to Scotland, in a development that was sought by the Scottish Government and welcomed by the Justice Committee in its stage 1 report on the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill.
I hope that the committee supports our view that an LCM is necessary. I am happy to answer any questions.