Monday 8 March 2021 11:46 am

Financial Services Bill: Time to act

Crypto AM Parliamentary Special, with Lord Holmes of Richmond MBE

It’s a complete pleasure to pen five pieces, over the coming week, setting out how I believe we can take the opportunity of the Financial Services Bill, currently proceeding through Parliament, to make material differences to key aspects of our finance landscape.

Later in the week I will consider, as they relate to financial services: artificial intelligence (AI), Blockchain and Distributed Ledger Technology (DLT), crypto, distributed digital ID, patient capital and finally, on Friday, the need for a centre – at the centre – to make all this whole.

First though, financial inclusion.  And when I say financial inclusion I mean it broadly.  Certainly for those individuals who find themselves at the sharp end, shut out of mainstream financial services, often those with the least, forced to pay the most not least for essential services such as energy.  YES, for all of them, but, also, as important, for all those SMEs unable to get the lines of credit, the right assessment of their real time risk, stunted as single entities, collectively, a serious slug of GDP unrealised.

At the systems level I believe we need a clear line of responsibility on financial inclusion, from the Treasury, through the Bank of England, the regulators and the individual firms: everyone, a part to play.

I have suggested a financial inclusion objective for the Financial Conduct Authority (FCA), ranking pari-passu with their other objectives.

What we can achieve

I suggest, similarly, an objective for the Financial Policy Committee (FPC) through which perhaps we can reimagine exactly what we mean and what we can achieve through the concept of financial stability. The FPC defines financial stability as: “A stable financial system is one that can provide crucial services to households and businesses in good times and bad.” It seems self-evident that – with 1.3million individuals without a  bank account and thousands of SMEs without the lines of credit they require – to cite just two examples, currently, we neither have financial inclusion, nor financial stability.

At the more specific level I am asking the government to consider the issue of ‘lead generators’ and the question of access to cash.

In terms of so called ‘lead generation’, the aim is straightforward; to make it a regulated activity.  Lead generation is the practice of actively seeking those in debt and selling those details to ‘debt advice services’ or ‘debt solutions services’.

Lead generators for debt management and debt solution services use online, paid search (PPC) and social media ads to gather details of people seeking help with debts. These leads may then be sold on to other lead generators (or ‘packagers’) or directly to firms providing debt solutions.

There is an unfortunate regulatory asymmetry at the heart of this.  While the activity of introducing an individual to a credit provider (credit broking) is regulated by the FCA, the activity of introducing an individual to a debt advice or debt solutions service by way of business is not. The Money Advice Trust and StepChange Debt Charity estimate that as many as 10% of people using a search engine to search for help from StepChange Debt Charity may have been inadvertently diverted to a ‘lead generator’ site.

Gateway to harm

It seems clear that these unregulated, ‘lead generators’ can be little more than a  gateway to harm for financially vulnerable people who are being passed on to a debt solutions market where a fractured regulatory framework is causing catastrophic outcomes for consumers.

In February, the Insolvency Service published guidance setting out its expectation for both Insolvency Practitioners and Recognised Professional Bodies (who provide a form of regulatory oversight for Insolvency Practitioners), on their responsibilities for the advertising by lead generators who introduce customers to them. However, this new guidance states that ‘concerns about misleading or irresponsible websites or other advertising generated by an unauthorised debt advice lead generator… should be reported to the ASA’, meaning there will continue to be a reactive approach to addressing ads only once they have been published.

While a key part of the client acquisition chain remains outside the scope of regulatory action, the problems with unregulated lead generators, and the resulting risk of harm for financially vulnerable consumers, will continue.

The solution is simple, over to you FCA.

Finally, in terms of cashback without a purchase, which I am raising this afternoon, the purpose is to highlight issues around financial inclusion, access to cash and the potential to crowd in innovation to both.

Difficult for retailers

Covid, as with so much, has illustrated many more than two sides to the cash coin. 

In October last year, the Treasury said EU regulations made it difficult for retailers to offer cashback when people were not paying for goods or services, and this had been a barrier.

Well, that barrier is gone now.

The economic secretary to the Treasury understands the issue: “We know that cash is still really important for consumers and businesses – that’s why we promised to legislate to protect access for everyone who needs it. We want to harness the same creative thinking that has driven innovation in digital payments to maintain the UK’s cash system and make sure people can easily access cash in their local area.”

Similarly, Natalie Ceeney, the chair of the community access to cash pilots, said it was essential that the government and other groups committed to keeping cash viable.

“This is increasingly urgent,” she said. “Last year we warned that the UK was sleepwalking into a cashless society. Covid-19 has placed even greater strains on the whole system.”

I hope that this afternoon my amendment will prove a shot in the arm for cash, for those who need it, use it, trust it, for financial inclusion and connected communities, right now, we still need cash.  If not necessarily quite king, cash still very much has currency.

These proposed additions to the bill – a financial inclusion objective for the FCA and FPC, the regulation of ‘lead generators’ and the right to cashback without purchase – are all key to improving financial inclusion.

Financial inclusion, for individuals, for firms, a horizontal, a vertical responsibility, a potentially golden thread, the essence of what financial services are for: to enable, empower, to unleash individual, collective, national and, rippling out from our shores, global potential.


Lord Chris Holmes is Vice Chair of the Parliamentary Groups on: FinTech, AI, Block Chain and 4IR.  He has co-authored Lords Select Committee reports on: Digital Skills, Social Mobility, Financial Inclusion, AI, Intergenerational Fairness and, last year, Democracy and Digital Technologies.  He also authored a report on ‘Distributed Ledger Technology for public good: leadership, collaboration, innovation.’

Further detail about amendments to the Financial Services Bill can be found on Chris’s Blog:



Twitter: @lordchrisholmes