New Clause 14 - Publication of trends in bank lending

Financial Services (Banking Reform) Bill – in a Public Bill Committee am 4:15 pm ar 16 Ebrill 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

‘(1) After section 1E(2) of chapter 1 of Part 1A of FSMA 2000 insert—

“(3) The FCA shall collate and publish anonymised consumer and business lending data disaggregated by UK financial institution and presented on a postcode-level basis.”.’.—(Chris Leslie.)

Brought up, and read the First time.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I beg to move, That the clause be read a Second time.

In the United States there has been quite a significant debate in recent years about what are often called lending deserts, those parts of their country where access to credit and other banking services was less available than in other parts of the country. It is an even more acute problem in this country. It is not just an issue for personal current accounts; small businesses wishing to access banking services often feel as though their location could inhibit their access to certain services. They could feel indirectly discriminated against because of postcodes or geography—the part of the country in which they are located.

New clause 14 would ensure that, in the Financial Services and Markets Act, we provided a power for the Financial Conduct Authority to

“collate and publish anonymised consumer and business lending data disaggregated by UK financial institution and presented on a postcode-level basis.”

The new clause would give transparency and information, so we can hold the banking sector to account much more. We want to see greater granular detail, breaking down the patterns of banking activity in different parts of the country.

During the progress of the Financial Services Bill through the House of Lords, a cross-party alliance of peers—including Lord Sharkey, Baroness Kramer, Baroness Hayter, the now Archbishop of Canterbury and others—backed an amendment that called for the FCA to

“require each holder of a banking licence to publish relevant data each quarter, by post code, including the total amount of lending to small and medium sized enterprises.”

In response, Lord Newby confirmed that the Government would pursue that aim through an industry-led initiative backed up by the threat of legislation in the current Bill. He said:

“we will work with industry to collate and publish lending data that is disaggregated by institution and presented on a postcode-level basis. The Government will take this forward as an urgent and pressing matter. In reiterating our commitment to make progress in this area, I confirm that should our negotiations with industry fail to deliver—I sincerely hope that that does not happen—the Government will introduce amendments to the Banking Reform Bill along the lines proposed in the amendment”.—[Official Report, House of Lords, 12 November 2012; Vol. 740, c. 1359-1360.]

That was back in November. I asked the Minister in a written question in February whether the Government had made any progress on this issue, as we are now in Committee and there is an opportunity for the Minister to consider fulfilling the commitment that the Government made in the other place. The Minister reiterated that the Government were still trying

“to secure a commitment from the banks that they will publish postcode level data by institution.”—[Official Report, 28 February 2013; Vol. 559, c. 655W.]

He also confirmed that the amendment option still existed.

I would like the Minister to update us on what is happening on this issue. It is important that we see what is happening inside the sector. We are not looking for personal information or for breaches of data protection; we are asking for anonymised patterns of lending activity. If we are going to talk about how the banking sector is serving our communities we have to have that basic level of information, so that we can see whether we need a regional banking sector or other forms of intervention—there has been talk of investment banks and various other measures. If we are going to get that policy right, having a better and more detailed impression of what is happening in the market is essential.

Photo of Greg Clark Greg Clark The Financial Secretary to the Treasury

The hon. Member for Nottingham East is right that this matter is important. As he alluded to, during the passage of the Financial Services Bill through the House of Lords an amendment was tabled to the effect that

“the Financial Conduct Authority must require each holder of a banking licence to publish relevant data on a quarterly basis by post code, including the total amount of lending to small and medium sized enterprises.”

The amendment was withdrawn because the Government committed to work with the industry to get it to make a voluntary commitment to publication. In giving that commitment on 12 November last year, Lord Newby confirmed that the Government would amend this Bill to require the publication of those data if agreement was not reached.

Since then, the Treasury, the Financial Conduct Authority and representatives of the banks have been in discussions, in particular with the Information Commissioner’s Office and the Office of Fair Trading, to agree a scheme through which the data could be disclosed. That needs to be done properly and in a considered way, because there are risks here; the hon. Gentleman would be the first to criticise the Government if, inadvertently, personal and sensitive information about the financial affairs of individuals reached the public domain because this matter was addressed in a way that was less than fully thought through. To give an illustration of the case in point, postcode data are clearly the means that is envisaged, but certain postcodes—not even those at the lowest level—are capable of identifying individuals. There are areas in which there are very few properties—perhaps only one property—and the effect of disclosing the lending information by postcode would be to reveal to the public a particular person’s indebtedness. That is clearly incompatible with many aspects of the banks’ obligations, some of which are policed by the Information Commissioner’s Office. So the work is painstaking. The reason why we have not tabled an amendment at this stage is because we expect to be able to conclude such an agreement. The goodwill has continued; it is the technical aspects that would prevent any such unintended consequences that are being discussed.

We want to go further than the commitment that was given in the House of Lords. We want to see, for example, consumer and mortgage lending, as well as small and medium-sized enterprises, covered. The ability of individuals to obtain credit is an important matter, and we should make this measure as comprehensive as possible. We intend to keep our commitment, and we are confident that we will be able to keep it. I can confirm to the Committee that even though we expect agreement, if necessary—and we do not think it will be necessary—we will table amendments to the Bill when it reaches the House of Lords if, as is not expected, agreement falls away. I will, of course, update the House as soon as an agreement is reached, and make it available for scrutiny by hon. Members. One way or another, the commitment that was made seriously under the terms of the amendment will be kept by the Government in the months ahead.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I am grateful to the Minister for that update. He will have to forgive us for pushing and prodding in a slightly formal way by tabling a new clause in this manner. But he would not expect anything less from us, given the importance of this issue as a prerequisite to learning and thinking through where policy reform should go in the future.

I do not think that the risks of postcode data are insurmountable. We have called specifically for anonymised disaggregation, and I am sure that we can find a way to do that in a way that is less likely to jeopardise such disclosures. However, I accept that that is an important point of detail, and it is important that we get the  technical level right. I am glad to hear that the Government are still making progress. It would have been helpful if the Minister had set out some sort of time scale for concluding this issue. If by Report we still have no further news, that would be pretty bad given that this started back in November. By then it would be reasonable to expect a conclusion to the issue, but that is just my feeling about the progress of this issue. I am grateful to the Minister for reiterating the Government’s support for this issue; I just do not want to see it fall behind and go on to the back burner. Given the Minister’s commitment and his assurances, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.