Examination of Witnesses (Questions 100-111)|
1 MAY 2007
Q100 Mr Gauke: One final question.
I do not suppose either of you know what the OFT is doing about
the campaign for Christmas products, do you?
Ms Whyley: No, although we are
very encouraged to hear that you are going to write and ask them,
and I stress the urgency. I think Elaine and Brian are right,
we are in May and people start their Christmas saving in February,
so we may well have already missed the boat this year, so we really
do need to know what is happening.
Mr Rhodes: I might be able to
be a little bit more helpful. They are keen to meet us and I am
meeting them shortly.
Q101 Chairman: But, as of this time,
you do not know.
Mr Rhodes: I am not here to defend
the OFT either, but ---. I expect to meet them in the next fortnight.
I suspect, as a result of this morning's discussion, that will
certainly take place within the next fortnight if not sooner.
Q102 Peter Viggers: I was interested
in the emphasis that Citizens Advice place on the encouragement
of individuals to save, even though they may be in debt, and drawing
on its very long experience.
Mr Rhodes: Yes.
Q103 Peter Viggers: Do you think
government strategy on financial inclusion takes sufficient account
of the importance of promoting savings by those in debt?
Mr Rhodes: "No, but",
is the answer. As I said at the outset, it does strike me that
section four of the March report was really quite carefully drafted
in terms of what people were going to look at in terms of insurance
as against saving, and I think that leaves us feeling slightly
or potentially frustrated; but I think initiatives like the Saving
Gateway have got to be positive signs and, if you like, what we
see as an increased interest by the Government in the last year
really in promoting financial education has also got to be welcome.
I think the kind of issues that arise for us are the kind which
are reflected in the NAO report on the FSA which was issued yesterday,
which is that there is a lot of fragmented activity going on around
Whitehall and quite how that fits together and how, going back
to the NAO report, that fits together with what is happening down
in Canary Wharf with the FSA. If that could be got together rather
better, maybe we would have even more focus on the saving aspects
of financial inclusion.
Q104 Peter Viggers: I must say, I
did note your use of the expression that banks have "spare
profits". I wonder if you would like to have another crack
at defining that?
Mr Rhodes: I am not sure how far
I want to be taken down this track. I think I simply said that
the financial sector appears to have fairly strong balance sheets
and reports recently, but I do not think I want to be taken any
further, except to reflect that some of those institutions have,
from our perspective, shown a real commitment to the financial
inclusion agenda and some less so.
Peter Viggers: Let us leave it at that.
Q105 Mr Breed: A couple of brief
questions. If the big banks are not quite as interested as we
might like them to be in the smaller market and we have not got
the credit unions in the same sort of coverage and understanding
and market acceptability, is there not a case in between the two
for bringing the credit unions up more along the idea of a community
banking operation so that people recognise it much more? This
is a sector which is completely different from main banking, because
it has the features of credit unions, but it is much more acceptable
and has a degree of regulation within it, probably a light touch.
Is that not a way forward?
Mr Rhodes: The short answer, I
think, is, "Yes." We in Citizens Advice are working
at a national level closely with ABCUL, the largest of the credit
union groupings, and, indeed, it is also happening at a local
level. In fact, I believe, in your own constituency, the Liskeard
bureau is working to help develop with the credit unions, and
that has got to be welcome.
Q106 Mr Breed: I am hoping ultimately
the Cornish credit unions will get together so we have a Cornish
Community Bank, but that is perhaps a fond hope. Looking at the
next thing, have you come across the fact of banks utilising what
we may call the money laundering regulations as a very convenient
way of stopping some people being able to access a bank account?
Mr Rhodes: I do not pretend to
be an expert in this, and if I get this wrong I am going to end
up writing back to you, but I think that there are a whole load
of issues out there as to why, in certain circumstances, basic
bank accounts and the rest are more difficult to access. This
is as much a personal view as anything else, but I think the sense
is that there is almost as much to do with the attitudes of individuals
within a branch of a bank and the attitudes and understanding
of what the position is as much as any concerted effort to be
Ms Whyley: We would agree with
that. I think there is still quite lot of confusion around how
those regulations should be implemented, and I think it is very
dependent on individuals within individual branches. I do not
think that accounts for all the people that still do not have
bank accounts, but there are still people being turned away because
they cannot provide the right ID. It is less of a problem than
it was, and I know the Banking Code Standards Board's "mystery
shopping" is helping that process, but I think there is still
some inappropriate use of those regulations and I think there
can be a lack of understanding with branch staff and customers
actually of the right ID for that account.
Q107 Mr Breed: Finally, in terms
of the education, it seems to me that if we are going to get this
inculcated in that way, it has got to start at a much lower level,
perhaps even at secondary school education level. I know there
was some evidence that we are beginning now to recognise that
that ought to be some part of the curriculum so that people understand
the whole way in which the financial industry operates, so that
when they do get approached by credit card companies or are seeking
savings or understanding that sort of thing, they have some reasonable
understanding. Is that something you think should be more heavily
Ms Whyley: I think there is evidence
that financial education, even with very young children, and actually
drawing out the financial education lessons in some of the things
they would be learning every day anyway, particularly with maths
and so on, can help people become more financially capable. I
know the Personal Finance Education Group is doing an awful lot
to promote financial education within the curriculumso
I think there are efforts therebut I think that is a different
thing from financial capability. It can help contribute to it,
but when you get out there and you are making those decisions
and you are faced with the vast array of choices, there is still
a need for generic financial advice and other types of support,
but it can only be a good thing.
Mr Rhodes: I fully agree with
that. The FSA is providing some important funding to help that
happen at secondary level. One of the banks, which I did not mention,
is going to be helping bureaus promote it at a primary school,
junior school, level, and I think that begins to open up some
very interesting opportunities at that level which begin to touch
on the Child Trust Fund, on which I am not an expert, but where
bureaus and schools can work together in a complementary way with
bureaus coming in and working with parents groups in those schools
at the same time as the children are learning about things in
class. It seem to me that there is a real risk that an eight or
ten year old coming back from school who is asking parents to
pick up a pair of scissors to cut up their store card might get
a clip round the ear unless the parents have actually been given
the same message at the same time.
Q108 Chairman: Talking about that,
I think there is a promotion today from the Competition Commission
saying that if store cards are charging above 25%, then there
could be a cheaper way of doing things. That started in this very
community when the store card people came to us. I presume you
welcome that, giving even more clarity?
Ms Whyley: I am not entirely familiar
with all the detail, but certainly anything that flags those higher
interest rates up to consumers, absolutely, yes.
Q109 Chairman: John, quickly to finish,
you wanted regulation for Christmas savings products. We do not
have that. What about the present situation? Is it adequate now?
Mr Rhodes: For Christmas savings
Q110 Chairman: Yes.
Mr Rhodes: No. It does seem to
us that, if you have got 750,000 people who are in a market with
a dominant supplier, more people than there are in the whole of
ABCUL membership, then it does seem to us that there should be
a regulation of that, and I suppose our feeling is that it probably
sits with the FSA. It is a nicety as to whether it is a savings
scheme or not, but perhaps more important whether people see it
as that. We would look to the FSA which describes itself as the
Financial Watchdog to provide that oversight.
Q111 Chairman: As we heard earlier
from Brian Pomeroy, the OFT is investigating the findings about
the hamper market, including whether there is fair competition,
but do you think it is possible or appropriate to consider competition
in the hamper market separately from the wider markets or shorter
term savings products?
Mr Rhodes: I think I am going
to pass on that. I do not think I can give you a particularly
Chairman: If you pass on that, I will
pass on the session this morning. That is it ended. Thank you
for your attendance this morning and for your evidence.