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Tory ministers were dealt an embarrassing defeat tonight as the House of Lords backed a ban on nuisance cold-calling.

Peers voted for plans to let unsolicited calls be outlawed if they could harm vulnerable customers.

The House of Lords backed a cross-party amendment to the Financial Guidance and Claims Bill by 253 votes to 205, majority 48.

They also backed a linked amendment that would give a new financial guidance body responsibility for consumer protection.

Ministers offered a compromise, promising future plans to ban cold calls from claims management firms and pensions advisors.

But critics said the government must go further.

(Image: @dwppressoffice/Twitter)

The amendments were backed by Labour, the Lib Dems and Tory former pensions minister Ros Altmann.

Lib Dem Lords leader Dick Newby said: "Liberal Democrats are delighted that the government has had to accept our amendment on this vital issue.

"Cold-calling is a scourge of modern society and companies flogging financial services often prey on the most vulnerable.

"This move is another step towards ending the menace of cold-calling once and for all."

Meanwhile, people swamped by problem debt face getting a six-week “breathing space” in a separate victory for Tory rebels and Labour.

The government agreed cross-party calls for the new period this morning to avoid a third defeat in the House of Lords.

It would give borrowers a window where they will not rack up further interest, penalty charges or enforcement action while they get advice for money worries.

Treasury minister Stephen Barclay admitted the poor feel “overwhelmed” and “helpless” as he announced a consultation running to January.

He vowed: “We are working to give people who are overwhelmed by debt more time to seek advice, find a workable solution, and help get their lives back on track.”

The move came hours after Labour, the Lib Dems and Tory ex-pensions minister Ros Altmann drew up a Lords amendment calling for the move.

They had urged the Tories to stick to a pledge to introduce the move in their 2017 manifesto, much of which has since been dropped.

Labour claimed the government was “rattled” into action.