Examination of Witness (Questions 460-479)
MR BRIAN
POMEROY
9 MAY 2006
Q460 Chairman: It is nice to see
you here. Could I first of all thank you for your assistance in
the ATM working party last week. We hope to take that forward
but your contribution to it was very helpful to us. I will start
by asking you to explain how you see the role of the taskforce
in promoting financial inclusion. Is there a role for a consistency
across government and industry to promote financial inclusion?
Mr Pomeroy: Yes, there is a role
for consistency across government and industry to promote financial
inclusion. Perhaps starting with the role of the taskforce, our
terms of reference really have two parts. The first is to monitor
progress towards three specific aspects of financial inclusion:
the first is reducing the number of people who are unbanked; the
second is increasing the supply of affordable credit; and the
third is increasing the supply of face-to-face money advice. That
is the area, if you like, in which we work, but I think there
is a need for a consistent approach. Indeed I think the taskforce,
composed as it is, from components across the sectors (that is
to say, the banks, third sector lenders, consumer interests, research
interests and so forth) does embody the cross-working that you
have described. We have tried to bring this group of people with
their various interests and affiliations into a cohesive position—and
I believe we have achieved that—and then to engage with
the various parts of the relevant industry (for example, with
the banks, the Treasury, with third sector lenders and others
in the advice sector) in order precisely to produce some kind
of coherent forward progress.
Q461 Chairman: What areas have you focused
on in your first year?
Mr Pomeroy: We have focused obviously
on the three areas of financial inclusion that were in our taskforce
ToRs. I would say we have done six things, Chairman. First of
all, because our principal task is to monitor progress, we have
put in frameworks for monitoring. Those included commissioning
survey work of our own where it has not existed publicly. Secondly,
as you will know, at the time the taskforce was set up the Government
also established a Financial Inclusion Fund of £120 million
to be spent in various ways. We have put a lot of our effort into
engaging with the departments spending that money, the DTI, the
DWP and the Legal Services Commission, in order to make sure that
the detail of those programmes truly reflects what financially
excluded people need and what the programme needs to deliver.
The third thing we have focused on is trying to engender constructive
dialogue with the retail banks at an operational level, so that
we can discuss actively and concretely with them what the barriers
are to making progress, for example, in opening bank accounts.
That is a forum which I believe has not existed before. We have
created one. I am happy to expand on this if you would like me
to but I believe we are having very constructive discussions about
specific initiatives which may ensue. We have also focused on
an area of work which, frankly, was not identified by the Government
when it published its financial inclusion strategy, and that is
work on the demand side. We say that it is vital for suppliers
of products, such as banks and others, to be supplying them properly,
et cetera, but it is not enough. You need to work with financially
excluded people too, because they will not find their way to their
products without some specific help. As you will be aware, we
have recently launched an initiative with intermediaries who are
in contact and entrusted by financially excluded people. That
was a vital missing part of the jigsaw, which we have put in place.
We have got it funded: we made a submission to the Treasury and
they funded it and that is now in place. We have also focused
on filling gaps in information. It is true that, whilst financial
exclusion is not a badly researched area at all, there are gaps.
For example, you have referred to ATMs in your introduction, Chairman,
and a lot of the debate about ATMs and access to cash, we think,
has taken place on the basis of anecdotal rather than statistical
evidence, so we have commissioned research which will be published
next month which gives a rather clearer statistical picture of
how people access cash and what sources they use. We are also
doing work on advice, because we think there is inadequate knowledge
of that, and we have also recently commissioned workshops where
we talk directly to financially excluded people, hear their voice
directly about what it is they want, what is wrong with the existing
product, how they could be better. I think that filling the gap,
Chairman, has been another important element of our work. The
last thing we have focused on, although it is not explicit in
our terms of reference, is using our existence to try to raise
the profile and awareness of financial inclusion.
Q462 Chairman: I have been engaged
in correspondence with the Banking Code Standards Board on the
issue of basic bank accounts. We note in their latest report that
in their mystery shopping some banks went back on the progress
they had made. I am asking for that information to be made public
because I think that is the only way we can achieve—which
is one of your aims—halving the number of people without
access to basic bank accounts on that. How do you feel about that
issue? The Banking Code Standards Board is doing mystery shopping
and getting that information, but it cannot be shared and so we
cannot identify particular banks. It does not seem to me to be
making progress at the end of the day if there is not that transparency
there.
Mr Pomeroy: The first thing to
say is that we are as concerned as you are about the results of
the mystery shopping exercise. One has to say, in fairness to
the banks, that it was a significant improvement over the previous
one, but nonetheless it still has some way to go. Before coming
to the question of disclosure and the publication of information,
perhaps I should say that we have a detailed discussion with the
banks on exactly that subject, which I hope will lead to some
kind of amplification or supplement to the banking code itself,
to try to be more specific about what the standards should be
in the areas in which the banks are not meeting the code. On the
question of disclosure:, as I understand it, the way the Banking
Code Standards Board works is that banks subscribe voluntarily,
and part of the deal, if you like, of their subscribing is that
the findings—and I assume this applies not just to basic
banking but to all findings—are kept confidential. Publication
of anything always sharpens incentives, but one would not want
to find that if one insisted on publication the banks did not
take part in the survey.
Q463 Chairman: I have had correspondence
with Gerald Lemos and he said that it would be helpful to write
to the banks. At the end of the day, what we will achieve as a
committee is that we will be publishing information on banks who
say they are happy to have their progress made public, and for
those banks who do not want it published we can say that those
banks do not want it published. I do not think it helps at the
end of the day with industry, if they want to move forward on
this particular issue.
Mr Pomeroy: Chairman, I think
the taskforce would find that very positive. If some banks are
prepared to publish voluntarily, that would be excellent, and
if it encourages others—
Chairman: We will push along that line
to help you.
Q464 Mr Mudie: I have a built-in
suspicion of middle class people making money out of helping the
poor. Tell me about your budget. It is £3 million. Is it
over three years or is it £3 million a year?
Mr Pomeroy: It is over three years.
Q465 Mr Mudie: So it is £1 million.
Mr Pomeroy: Yes.
Q466 Mr Mudie: Did you spend your
£1 million in the first year?
Mr Pomeroy: We have not yet. The
money is mainly spent on research and surveying. To the best of
my knowledge, we have spent about half a million.
Q467 Mr Mudie: Was that in a full
year?
Mr Pomeroy: Yes. I may not get
the matching exactly right and I may not account for things which
have been committed to date but not paid, but certainly the taskforce
has been in existence for a year and over that year we have commissioned
a number of surveys and research projects and the total of those
is about half a million.
Q468 Mr Mudie: What is the cost to
the board?
Mr Pomeroy: We are unpaid.
Q469 Mr Mudie: There is no board
payment.
Mr Pomeroy: We are not paid.
Q470 Mr Mudie: What a very good example.
Mr Pomeroy: That is very kind
of you.
Q471 Mr Mudie: It is a very good
example. If it spreads, ordinary people might get on these boards.
How many staff do you have?
Mr Pomeroy: We are supported by
a Treasury team of three. I should say that those staff, while
they spend a lot of their time on taskforce work, are in fact
the Treasury team on financial inclusion, so they have other things
to do as well.
Q472 Mr Mudie: So they are not full
time.
Mr Pomeroy: They are not full
time.
Q473 Mr Mudie: In one reference,
you had a visit—and I am not criticising the visit, it sounds
very sensible—to Chicago and you looked at the Community
Reinvestment Act. It would have been useful if you had had a staff
member who wrote a thorough report, so that we and other people
could consider its relevance to Britain. Who is going to do that?
Mr Pomeroy: We did have two staff
members, actually.
Q474 Mr Mudie: Two of these Treasury
people.
Mr Pomeroy: Yes, indeed, and they
did produce a report for the taskforce, which went to a taskforce
meeting around the middle of last year.
Q475 Mr Mudie: You might be prepared
to let the Treasury Select Committee have a look at that report.
Would you?
Mr Pomeroy: I cannot see any reason
why not.[1]
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Q476 Mr Mudie: Do you think it is sensible
just to have you serviced by the Treasury? We have always found
the Treasury pretty restrictive in its thinking and not very inclusive.
If they are the voice of your taskforce in government, is that
not restrictive? Would you not prefer staff of your own?
Mr Pomeroy: I will come to that
last point in a moment. Are they our voice in government? We have
always made it clear to the Treasury that we want to act independently
and have an independent voice. Indeed, we do engage not only with
Treasury officials but also directly with ministers, so I do not
think we feel we do not have a direct route, independently, if
you like, of officials. Should we have our own? To be honest,
it is not something I have considered because I have not frankly
experienced any problems, either in the levels of service provided
or, indeed, in bias. Frankly, I think if there were any suggestion
of bias, the taskforce would be very quick to say, "That
is not what we want. Please do what we are asking you to do."
Q477 Mr Mudie: Do you pay these people?
Do their salaries or part salaries come out of your million? Are
you subsidising the Treasury, in other words?
Mr Pomeroy: I would like to check
this and give you a proper informed answer. I believe that some
of the fund supports some of their time, but I will need to give
you an informed answer.
Q478 Mr Mudie: If I were paying their
salaries or part of their salaries, I would prefer to choose my
own people.
Mr Pomeroy: If when the taskforce
started it had discovered that the people provided to it were
not suitable (that is, were not capable or were not working),
we would have said so, frankly. If I may add one point: when I
was asked to lead the taskforce, the senior official at the Treasury
did say to me, "Look, if you have any difficulty at all with
the support, you should come and talk to me." So it has always
been an open door, frankly, which I have never had to open.
Q479 Mr Mudie: You meet three or
four times a year. In view of the urgency of the matter and the
complexity, do you think that is enough?
Mr Pomeroy: We met six times in
the first year. We met a little more frequently than we were told
we would meet. We met roughly every two months rather than every
three months. I suppose one answer is that you could say it is
never enough, because you can never do enough and you can never
do enough fast enough.
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