Select Committee on Treasury Minutes of Evidence


Examination of Witness (Questions 540-558)

MR BRIAN POMEROY

9 MAY 2006

  Q540  Mr Mudie: I am with you so far but you are chairing the taskforce on financial inclusion. It is not unfortunate; it is outrageous is it not? You cannot turn around and defend it on the basis that to do anything about it would be anti-competitive. That lets the banks off the hook.

  Mr Pomeroy: No.

  Q541  Mr Mudie: We are trying to get basic bank accounts, you are supposed to be helping us, and you are prepared to shrug your shoulders—not you personally, but your taskforce—and regard it as unfortunate when basic bank account holders are banned from branches, from approaching the counter. Do they smell? Do they look differently? It is just outrageous?

  Mr Pomeroy: Going back to the anti-competitive point, just to make it absolutely clear, the taskforce was not saying that was a justification for it but noting that the banks had the freedom to—

  Q542  Mr Mudie: I would not simply note it. I would expect you to be screaming from the rooftops: "It is unacceptable."

  Mr Pomeroy: We have indeed raised it with the banks. We have raised it absolutely in those terms.

  Q543  Mr Mudie: I hope you raised it in stronger terms than this.

  Mr Pomeroy: We have raised it in strong terms.

  Q544  Mr Mudie: Good.

  Mr Pomeroy: On the word "unfortunate" that was, if you like, an understatement on my part. We regard it as serious and we would like to see those terms restored.

  Q545  Mr Mudie: Does the taskforce have a formal view on the ending of the Post Office card account? A formal view that they have communicated to government?

  Mr Pomeroy: Our formal view is that the ending of the Post Office card account should be used as an opportunity to get those who are unbanked into banking.

  Q546  Mr Mudie: They must love you. They must love you. Who fed you this information that you have in one of your minutes that sub-postmasters are now less worried about it because from basic banking transactions they are receiving more income. I have not met a sub-postmaster who is not outraged, worried stiff about the ending of Post Office card accounts. Who told you this? The DWP? That is in your minutes. I will read you your minutes. You say: "As sub-postmasters are now beginning to receive more income from basic banking transactions over the counter". There is not one sub-postmaster who would subscribe to that. Maybe factually there may be an argument but everyone sees the ending of the Post Office Card Account, as John said, as the end of about 10,000 post offices.

  Mr Pomeroy: There is no sense in which the Taskforce is supporting the ending of 10,000 post offices.

  Q547  Mr Mudie: Why do you not say it?

  Mr Pomeroy: If it is raised in those terms I am sure we would say it. If I could just come back to our position on the Post Office Card Account, we are about financial inclusion and getting people into proper transactional banking. We do not consider the Post Office Card Account to be that, that is our starting point.

  Q548  Mr Mudie: Okay.

  Mr Pomeroy: The other things stem from that.

  Q549  Mr Mudie: Brother Brian, nobody did, they were seen as an interim measure.

  Mr Pomeroy: Yes.

  Q550  Mr Mudie: Subsidised to 2010, four years away, to give people time to get the universal bank together that John has spoken about. The DWP and other government departments have conveniently forgotten about the universal bank. The Minister is on record in Westminster Hall saying they are going to bank accounts whether they like it or not and if they do not, they will not get paid. That was what the Minister said in Westminster Hall. Where is the universal bank and why are you not saying it is outrageous to worry these businesses, threaten these businesses, inconvenience pensioners and other benefit recipients, four years away? It is also more ridiculous that you have done nothing, by the sound of that, on doing universal banking.

  Mr Pomeroy: Can I just take the two points separately. The first, coming back to the Post Office Counters and Post Office closures, as I said in an earlier answer, there is no question of that because of the accessibility of the basic bank account, if for no other reason. It would be very disadvantageous to financially excluded people if those closures took place. We absolutely sign up to that point. On the other question though, which is universal banking, what happens after the Post Office Card Account, as I said we see that as an opportunity.

  Q551  Mr Mudie: I know you do.

  Mr Pomeroy: If I may just finish the answer. What it is an opportunity to get people into depends on what is on offer. We do not know what plans, if any, the Post Office may have for introducing products in substitution of the Post Office Card Account. One of the discussions we will have with them shortly is about that. If there are products other than basic bank accounts which are suitable for people on low incomes and give them that functionality then we will support them, but we do not know at the moment what else will be available. When we do we will take a view on it.

  Mr Mudie: In terms of financial inclusion, I have never seen it as having everybody in the country with a bank account. On post office accounts, pensioners, for example, were offered a choice by the Government. They were offered a choice of just supplying their bank account and immediately their pensions would go into the bank account. I think they had 10 forms to sign and two telephone calls to make if they wanted a post office account. Amazingly, 51% went for the Post Office Card Account. They said, and they know their circumstances, "We want the Post Office Card Account" and the DWP has just pulled the trigger on it, four years away, done no work on its replacement and said "Tough". As the Chairman said, some of the pilot schemes that you have referred to have gone in without any consultation with the Post Office, the sub-postmasters or the customers and in actual fact they are a breach of trust because some people are being told, "You cannot now get a post office account" up in Jim's area. Why are you not as angry as I am about that? Why do you not see it as an opportunity? The pensioners do not see it as an opportunity.

  Q552  Chairman: We are running way over time with this session. I thought it was going to be a sleepy session, and I am delighted it is not but just give us an answer.

  Mr Pomeroy: Our interest, and it comes from our terms of reference, is in financial inclusion and bringing people into functional banking. I accept absolutely what you said, the Post Office Card Account was a stepping stone. The question is: a stepping stone to what? We would like to see it—and simply this is the Taskforce's view and it comes from our terms of reference—as a stepping stone into a fuller range of normal banking services. Whether that is basic bank accounts, which are available at the moment, or whether it is some other product which may appear, it may be neither, but always saying it is from our standpoint it is about financial inclusion and, as I have given you, our view of what the Post Office Card Account represents in those terms, the opportunity to get a significant number of the 30% who do not have bank accounts, would be a big win for financial inclusion, whether it is into basic bank accounts or some product as yet unknown or undisclosed or unannounced, we cannot say at this point.

  Q553  Mr Love: I am only getting one, George, because you have been going on. Can I go back to your terms of reference because you have suggested you cannot look at certain things. The first question I want to ask is, have you asked for an extension of your terms of reference into any of these areas? Would you like an extension, and this Committee could recommend that? What would be the implications for resources? You say you have a million pounds a year? Would there be a resource implication for that? The fund, and I suspect your organisation only has a limited timeframe in which to operate, would you like an extension of that? Do you think that would be necessary in order to fulfil your remit?

  Mr Pomeroy: Let us start. As I said, we have three areas in our terms of reference.

  Q554  Chairman: If you could reflect on those questions and write us a submission following this meeting I think that would be very important. Then we can look at that. Overall, parties know the Government's approach to the Post Office Card Account has alarmed us because there seems such complacency in that. There is a vacuum there and we want to make sure that there is activity between now and 2010 and we do not see that at the moment.

  Mr Pomeroy: I fully understand that.

  Q555  Chairman: Okay. We will get a submission, Andy, on that. A last question: Professor Elaine Kempson has written to us and she has expressed concern, amongst others, that the short-term nature of the funding for new debt advice services through the Financial Inclusion Fund means that large numbers of debt advisers will need to be recruited and then may face redundancy as soon as they have developed that expertise. Are you concerned about that?

  Mr Pomeroy: Yes.

  Q556  Chairman: If so, how can that problem be avoided?

  Mr Pomeroy: We are concerned about that, particularly in relation to advice because essentially advisers are being recruited and trained now. It will take between three and six months, I think, to train them and the funding ends in March 2008. Clearly if their work ends in 2008 because the funding does not continue that will be problematical. The Taskforce's position is that we understand there are restrictions of the public expenditure cycle and so forth but we would like to see that funding continue, and the Treasury is aware we would like to see that funding continue.

  Q557  Chairman: We have the Minister coming along on 22 May so if you can put your submission to us before that date that would be very helpful.

  Mr Pomeroy: Certainly.

  Q558  Chairman: Thank you for your time and best wishes with your task.

  Mr Pomeroy: Thank you.


 
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