On 5th November 2014, the Bishop of Truro, the Rt Revd Tim Thornton, sponsored an amendment to the Consumer Rights Bill, during its Committee Stage. The amendment sought to place a duty on the Secretary of State for Business, Innovation and Skills to make regulations to prevent the sale of high-cost short-term credit through unsolicited marketing calls. Following assurances from the Minister, the Bishop withdrew his amendment.
The Lord Bishop of Truro: My Lords, Amendment 105C is in my name and those of the noble Lord, Lord Mitchell, and the noble Baroness, Lady Bakewell. I declare an interest: I am chair of the trustees of the Children’s Society, which has co-ordinated this amendment as part of its campaign—of which I am very proud—on the impact of debt on children and families. We produced a report entitled The Debt Trap earlier this year.
In September this year, the Children’s Society launched another report, entitled Playday not Payday, which looked at the effects of the advertising of payday loans on children, and in particular at the telemarketing of payday loans. The report identified a gap in the regulations which allows payday loan companies to use unsolicited marketing calls to offer people payday loans through phone calls and texts. For mortgage products, this type of unsolicited marketing is completely banned by the Mortgage Conduct of Business rules. The Financial Conduct Authority, which regulates payday lenders, said:
“Cold calling can expose consumers to high pressure sales tactics which mean they can end up with an inappropriate or over-expensive product or service. Our investment and mortgage financial promotion rules therefore ban cold calling … unless certain conditions are met”.
Why, therefore, does the Minister feel that this ban should apply only to mortgages and not to other forms of credit such as payday loans? According to a poll by the charity StepChange, a third of its clients have received an unsolicited marketing call offering them a payday loan. The average client said that they received an average of 10 calls per week. Calls at that frequency, if aimed at certain vulnerable parents and families, can have a detrimental effect on a person’s mental health and well-being.
The Children’s Society found that of those parents who had never taken out a loan, only 7% said that they were receiving calls from payday loan companies more than once a day. That increased to 42% for parents who had previously taken out a payday loan. Given that we know that young parents are more likely to take out a payday loan, I share the society’s concern that this suggests that young parents who are already in financial difficulty are receiving the brunt of those calls. Anecdotally, we hear stories of payday loan companies sending “I miss you” texts to parents who have not taken out a loan after a period of time. I am sure that the Minister agrees with me that that kind of behaviour is unacceptable.
I understand that the Department for Culture, Media and Sport has recently launched its long-awaited consultation on nuisance calls, which will also cover unsolicited telemarketing calls. The proposal to make it easier to prosecute and fine firms that break the nuisance calls rules is of course welcome and will in the long term help reduce the number of unsolicited payday loan marketing calls. However, I am concerned that this does not go far enough to protect consumers. An outright ban, similar to that applied to mortgage products, would almost guarantee protection for vulnerable families from harassing and persistent calls from payday loan firms. Will the Minister commit to looking at this issue ahead of Report to consider using the Bill to further protect vulnerable families?
Baroness Neville-Rolfe (Government response): …I turn to Amendment 105C. The Government share the concern of the right reverend Prelate and the Children’s Society about payday lenders using unsolicited calls to market inappropriate products to vulnerable consumers. Indeed, we had a long debate earlier in this Committee on the whole issue of payday loans. Such practices must not be allowed to occur, as the noble Lord, Lord Deben, said. I reiterate that the tough measures that I outlined as part of the nuisance calls action plan will capture the practices of payday firms, among other industries. Such firms will no longer be able to target consumers as they have previously been able to.
The right reverend Prelate asked why, as mortgage calls were banned, payday lenders’ calls could not be banned. I am afraid I must take that question away; I was not aware of the ban on mortgage calls, and I will investigate and write to the right reverend Prelate to see if that provides some new avenue into the debate.
To conclude, the Government take the issue of nuisance calls very seriously, and I have set out a number of ways in which we are tackling the problem and the way in which we have speeded up. The Government will continue to work with consumer groups, regulators and of course industry, which need to make changes to find effective solutions. The work outlined in our action plan is under way—new things are happening all the time—and this will help to contribute towards achieving more long-term solutions to deal with nuisance calls. I have outlined a couple of points of follow-up, which we will pursue before we get to the next stage of the Bill, but in the mean time, I ask the right reverend Prelate to withdraw his amendment.
The Lord Bishop of Truro: I am grateful to the Minister for her response, and I thank all noble Lords who took part in the debate. Clearly, unsolicited calls struck a nerve with most noble Lords here. It was therefore ironic that we should have our own version of an unsolicited call when the Division Bell rang to empty this Room.
By way of response, I thank the Minister very much for the offer of a letter on the point about mortgages, which, as was reinforced in the debate, is a significant issue. I will stress and underline a point on my amendment. I understand entirely the strength of feeling in the Room about the way in which we are affected by unsolicited calls, but I want noble Lords to imagine what it must be like if you are leading a chaotic life in a vulnerable situation, where bizarrely, the phone ringing might be seen as a good thing rather than a bad thing—as many of us would see it. In view of some of the amendments we will come to later, there is almost an addictive quality. Some of these payday loan firms will buy into and hook into these people, who do not have the resilience to resist in the way that I suspect we can. We can joke about it. It might be a nuisance for us—we might be able to shout down the phone at a machine—but for some of the people that we represent in the Children’s Society those strategies are just not available. This is therefore very important. I am grateful to the Minister for her assurance of a letter, and I beg leave to withdraw the amendment.