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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