House of Commons Hansard Debates for 30 Mar 1994

Picture Manipulation

Mr. Andrew F. Bennett accordingly presented a Bill to require news media to prepare a code of practice to cover the principles by which pictures may be edited, altered or changed using computer techniques and to record clearly when old film is being used and when the person presenting the film was not present during its filming : and the same was read the First time ; and ordered to be read a Second time upon Friday 15 July, and to be printed. [Bill 84.]

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Orders of the Day

OPPOSITION DAY --

[8th Allotted Day]

Private Pensions

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : I have to announce to the House that Madam Speaker has selected the amendment in the name of the Prime Minister.

4.55 pm

Mr. Donald Dewar (Glasgow, Garscadden) : I beg to move,

That this House deplores the widespread abuse and unscrupulous techniques used to sell private pensions, which have prejudiced individual clients and induced them to leave occupational pension schemes and the State Earnings Related Pension Scheme to invest in pension provision which offers no real prospect of security ; notes the evident failure of self-regulation ; and, recognising the need for transparency and full disclosure of terms and conditions governing policies, condemns the failure of Her Majesty's Government to act and calls for effective direct regulation of the pensions and financial services industry.

For the avoidance of doubt, I must make it clear that the Opposition see an important place for private pension provision in the legitimate range of choice that is open to people who are preparing for retirement. The state is in that business, as are occupational pension schemes and private schemes. The mix will vary from person to person. All the possibilities should complement each other as people strive to construct the package that suits their needs. We are certainly ready to recognise the place of private pensions, but we are not starry-eyed about the way in which they are operated or about the problems that we face. We are certainly not prepared to ignore their shortcomings and the difficulties that were predicted and which have recently come to haunt us.

Our charge is that the Government have suspended their disbelief and critical faculties for political purposes. A blockage has inhibited their right and duty to act, with the result that a large number of people's interests have been prejudiced. Government policy has been marked by inaction and has allowed unacceptable practices to develop, as is widely recognised. Many people's pensions have been severely prejudiced. The Government have been something of a passive spectator as the confusion has grown. There has been muddle and the self-evident inadequacy of self- regulation, and to some extent Ministers have been bound by their own dogma

Mr. Ian Taylor (Esher) : For the sake of accuracy, it is wise to define self-regulation. We are talking not exactly about self-regulation but about regulation by professional organisations ; that distinction is sometimes lost on members of the public. We are not talking about self- regulation in the other sense of the word.

Mr. Dewar : I shall come to that when I mention the debate about the Personal Investment Authority and its future and the widespread reservations that have been expressed about the composition of its board. In the public's mind, doubts about self-regulation rightly arise when a regulatory organisation is dominated by the industry that it purports to regulate. The industry has

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significant reservations about the proposals in that respect. I give the hon. Member for Esher (Mr. Taylor) an undertaking that I shall return to that subject later and that my hon. Friend the Member for Edinburgh, Central (Mr. Darling) will deal extensively with the regulatory machinery when he closes the debate.

I want to set out the charges on the indictment because it is only fair that the Minister should be aware of the nature of our complaints. The first complaint relates to the active encouragement that the Government gave people to contract out of the state earnings-related pension scheme. Since 1988--the figures vary a little--I gather that about 6.5 million people have moved into approved pensions policies, which has been paraded as a triumph for freedom of choice and as a flagship of success

Mr. David Shaw (Dover) : Quite right.

Mr. Dewar : I was going to say paraded as a flagship of success for the hard right, but I thought that that description might be a little unfair on the Minister. The hon. Gentleman's cries encourage me to use the phrase with total justification and I adopt it accordingly. Indeed, if one looks back

Mr. Peter Thurnham (Bolton, North-East) rose

Mr. Dewar : Will the hon. Gentleman let me proceed ?

If you look back to 1988, you will find, Mr. Deputy Speaker, that most of the usual suspects were on the scene of the crime and very much involved. The present Chief Secretary, the present Secretary of State for Social Security and the Prime Minister himself were all, to varying extents, involved at about that period.

As I understand it, about 5 million people are in approved pension schemes at the moment, and that is a matter for concern rather than congratulation. My complaint is that neither the industry nor the Government made any attempt to explain the pros and cons. The Minister will remember that in January 1988 his Department embarked on an advertising campaign on which it spent £1.2 million, in effect, to advertise a product--the approved private pension that people would take if they contracted out of the state earnings-related pension scheme. That advertising campaign is now widely recognised as uncritical and unbalanced. SERPS was--literally--visually portrayed as a straitjacket from which the individual was invited to break out to the promised land. Many people uncritically took that advice and find themselves disadvantaged as a result.

There was no discussion about, for example, the variation in the performance of funds, the influence of the condition of the stock market and the level of interest rates at the time of retirement, or the advantages of index linking in SERPS where there was a revaluation in line with national average earnings. There was no discussion of commission and charges in the private sector--which I am told can often amount to 20 per cent. of total contributions even in the case of those policies. People were invited, without reservation, simply to move on a promise ; none of the shades of black and white were sketched in or referred to in the Government's or the industry's advertising. It is now obvious that great damage was done simply because there was no wish to let the arguments get in the way of the selling line.

Mr. John Butterfill (Bournemouth, West) : I hope that the hon. Gentleman is not seeking to imply that all those

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who opted out of SERPS will have been disadvantaged, because that is his how his remarks might be interpreted. Obviously, some will have been, but many will have had advantages.

Mr. Dewar : I totally accept that that would be the height of irresponsibility and I would not for a moment try to do that. I shall discuss the numbers in a minute or two. They are difficult to define, as the hon. Gentleman, who I expect has expertise in that matter, will appreciate.

Some ground rules for judgment are emerging, which are broadly accepted by the industry and by outside commentators. The real test

Mr. Oliver Heald (Hertfordshire, North) rose

Mr. Dewar : I will give way briefly, but I must not take too many interventions.

Mr. Heald : Does the hon. Gentleman accept that the problem that was outlined in 1986 was that the number of people with occupational pensions had remained static for 20 years, and that the Government were trying to persuade a large number of people to take on the benefits of enhanced pension provision ? The 5 million people who have done that since then have acquired real benefits, have they not ?

Hon. Members : No.

Mr. Dewar : Some of them, but not all. I know that the hon. Member for Hertfordshire, North (Mr. Heald) takes a great interest in these matters and is an advocate. I am sorry, he is a barrister. I must remember the English language as distinct from the Scottish terminology ; it is the same profession, as the hon. Gentleman recognises. He will remember--if he does not, I remind him--that when the National Association of Pension Funds Ltd. responded to the Green Paper "Reform of Social Security" in September 1985, it expressed specific anxiety about the Government's claim that the introduction of SERPS had stagnated the growth of private pension provision in the form of new occupational schemes.

The national association also argued :

"It is our firmly held view that a collection of money purchase personal pensions can be no substitute for the security of a defined benefit final salary scheme".

It argued in favour of occupational pensions, but was worried that many people who were not entering occupational schemes were opting out of SERPS in order to go into APPs where there were real and substantial difficulties in terms of their age profile and salary level. I will now discuss those subjects.

Mr. Heald rose

Mr. Dewar : I will let the hon. Gentleman in for the last time.

Mr. Heald : Do not the hon. Gentleman's reservations relate to an entirely different issue--the reform of occupational pensions in the Social Security Act 1986 ? The new personal pensions have enabled 5 million more people to enjoy enhanced pension provision. Does the hon. Gentleman accept that no one can argue that that is anything other than good ?

Mr. Dewar : I hear a mutter of applause run round the ranks of the faithful. If every one of those people had ended up with enhanced pension provision and had been

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advantaged by the switch, it is unlikely that I would be complaining, or that I would be backed by a wide range of professional opinion inside the industry.

I am arguing, and I am sure that the hon. Member for Hertfordshire, North is familiar with my arguments, that a very large number of people--62 per cent., according to the Government's figures--have earnings of less than £10,000 a year and many are too old and ought either to have remained in SERPS or ought by now to have returned to SERPS to maximise their advantage. It is untrue to suggest, therefore, that the rush to contract out, which the Government promoted and encouraged, is an unqualified blessing or that it has not left many people disadvantaged.

No doubt people will argue about the pivotal age above which it is a disadvantage to remain contracted out. Let us take a comparatively conservative figure, and assume that the age is 40 for men and 35 for women. If one adds to that the people who have earnings of less than £7,500 a year, one finds that 53 per cent. of men and no less than 71 per cent. of women should now contract back into SERPS. That is what I am assured by actuaries--I do not pretend that I have done those calculations myself. Many of those people should never have left SERPS. Suppose that one wants to be ultra-cautious. If one takes the pivotal age as 45 for men and 40 for women and an income of £6,000 a year or less, one finds that 39 per cent. of men and 54 per cent. of women are in that situation.

I am prepared to listen to arguments. I know that the Prudential, for example, takes ages of 49 and 42 as the pivotal ages whereas the Norwich Union takes 45 and 37. There is a range of professional opinion, but there is no doubt that all those companies and experts accept that there are very large numbers of people--perhaps as many as 2.5 million--who are contracted out and in whose interests it would be to return to SERPS, many of whom never should have left SERPS. I know that that is rather brutal language, but it is a scandal--a scandal which is no less serious because it was so long unrecognised and no less cruel because many of the victims were, and probably still are, unaware of their plight. We are talking about something that is a result of the Government's impetuous love affair with the private sector. I do not for a moment decry the contribution that the industry makes, but we cannot have that type of uncritical policy, which has done so much damage.

I noted that in the Observer last Sunday--the hon. Member for Havant (Mr. Willetts) will have read the article--a partner in a well-known law firm specialising in pension matters described the consequences of the Government's policy as "mind-blowing." I think that that is not unfair.

Mr. David Willetts (Havant) : The hon. Gentleman is arguing that it was disadvantageous for millions of people to leave SERPS. Why, then, in previous speeches, has he criticised what he regarded as the generosity of the rebates for people who were leaving SERPS and taking out personal pensions ? Surely those two arguments are inconsistent.

Mr. Dewar : No. I do not think so at all. If I want to prejudice the hon. Gentleman--if I want to persuade him to do something against his interests and I offer him an inducement to go down a road that is greatly to his

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disadvantage--it seems to me that I am insulting him twice. All I am doing is ensuring that he takes the wrong decision, against his own best interests. That is what happened. A very large number of people were impressed by the contracting-out terms, especially the 2 per cent. premium. They therefore moved over without considering the real arguments and ended up in a very unfortunate situation. That is not true of everyone, as I said, but it applies to as many as 2.5 million people ; that is an awful lot of people and something about which the House should be concerned.

I seem to remember that the hon. Member for Havant and I have discussed the matter before. He will remember the National Audit Office report that calculated that the Treasury was taking on a burden of about £9.3 billion, if I remember rightly, in the expectation of great savings later, which turned out to be only £3.4 billion. Even if we take a Micawber approach to the good housekeeping of Government, it is clear that we were invited to endorse an extraordinary piece of arithmetic and a bad buy for the taxpayer. Tragically, it also ended up being a bad buy for many of the people who took the inducement--I use the neutral term--that was offered.

Mr. Butterfill : Does the hon. Gentleman accept that we are talking with the benefit of hindsight ? One of the reasons for the relative imbalance is that we have had a world recession. Stock markets and property markets have failed to perform in the way in which we had hoped, which has affected with-profits life insurance policies and pension policies. Had the expectation that markets would continue to improve been met, the hon. Gentleman would not be making the analysis that he is making today.

Mr. Dewar : I accept that there has been a substantial movement that has complicated the calculation, but, in fairness, it was said by many people at the time that dangers existed and problems might well materialise. The trouble was that no one referred to it directly--it was not included in Government guidance and I fear that within the industry no one pointed out those dangers to the people who were going to put themselves in that risky position.

Ms Diane Abbott (Hackney, North and Stoke Newington) : Does my hon. Friend share the view of other Opposition Members, who are astonished that Conservative Members should seek to defend the indefensible ? Does he agree that the fact that people lost out had nothing to do with the world recession ? People on low pay lost out because the onerous charges that were levied by insurance companies far outweighed any benefits that they received from their new pensions.

Mr. Dewar : I shall come later to onerous charges. I have long since lost my ability to be astonished at Conservative Members' defence of the indefensible ; I do not confine that remark to the narrow technical subject of pensions.

I refer the hon. Member for Bournemouth, West (Mr. Butterfill) to the comments of National Association of Pension Funds, with which he will be familiar. Its memorandum in response to the Green Paper states :

"The Government must be prepared to explain to the public just what a personal pension means, especially in terms of the mechanism for buying one (including full disclosure of administration and commission costs), the uncertainty of performance (as their value must perforce be variable with market conditions), and the lack of any guarantees or discretionary protection."

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If those things had been pointed out by the industry, by those selling and by the Government when they advertised the option, some of the sadness and disadvantage to which I have referred might have been avoided.

The association's memorandum continues :

"Stringent investor protection is essential if the proposals for personal pensions are to gain any semblance of public acceptability. We do not believe that sufficient protection to investors in personal pensions can be provided through the self-regulatory framework being devised".

I agree with all but one part of that quote. The association said that the proposals would not have a semblance of public acceptability. Sadly, the public were not that wise and they took the proposals at face value. That is one reason for our present difficulties.

The hon. Member for Bournemouth, West challenged me about what was being said when the proposals were introduced. Slightly later, in March 1990, the Life Assurance and Unit Trust Regulatory Organisation, in its enforcement bulletin No. 7, was extremely critical of the industry's--not the Government's--advertisements, It stated, somewhat optimistically :

"few advertisements indicate, with any degree of precision, for whom opting out may not be suitable and accordingly an inappropriate contract might be sold which would not be in accordance with the high standard of conduct expected by Lautro of its Members."

It urged :

"Members must ensure that they do not accept applications in respect of opting out unless they are certain that the applicants, who respond to such advertisements, have been given details of all the information pertinent to their situation prior to making any decision to opt out of SERPS."

That warning from a self-regulatory organisation was largely unheeded. It might well have been a warning and a condemnation of the Government's advertising programme as well as that of the industry. The Government's approach has been thoroughly unsound. No doubt they will now argue that a change is coming : that we no longer have the 2 per cent. premium to which the hon. Member for Havant referred ; that there is now a 1 per cent. premium for people who are over 30 ; and that we shall soon move to age- related rebates. I accept that there is an argument for that, but the changes are an implied plea of guilty. It is interesting that the new advertising campaign, which states that people should read the small print of private pension policies, has not been funded to the extent of £1.2 million but in the rather more modest sum of £100,000. There is a little less energy and enthusiasm behind that campaign. I warn hon. Members that the damage will continue unless information and advice are genuinely and impartially given.

There are advantages to SERPS, which has been undersold. If that continues, the spin that is put on the sales pitch by representatives of the private pensions industry will still continue to tempt the unwary.

Mr. Thurnham : The hon. Member for Birkenhead (Mr. Field) is not in the Chamber at the moment, but I wonder whether the spokesman for the Opposition, the hon. Member for Glasgow, Garscadden (Mr. Dewar), will comment on how the Opposition view his pamphlet entitled "Private Pensions for All". Will the Opposition take that pamphlet on board or are they still waiting for the social commission for justice to determine their policy ?

Mr. Dewar : The Commission on Social Justice is a very social commission, but the hon. Gentleman is as confused about its title as he is in his attempts to divert me.

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If he is interested, I shall send him an interesting speech that I made the other day on that and related subjects. I shall not go into a general tour d'horizon as he has invited me to. I am talking about what happened to those who contracted out of SERPS and also occupational pension transfers. I know that that subject will interest the hon. Gentleman.

All I am saying to Ministers is that they have a problem with what has happened with SERPS and they bear a measure of responsibility for it. The Secretary of State and his colleagues have evinced malice towards SERPS in the past. The 1988 raid, which we all remember, was masterminded, if that is the right word, by the present chairman of the Conservative party. Hostile forces are still gathering round, including the deregulation task force proposals for reform. I hastily concede that the proposals have not yet been adopted by the Government, but they chime in with a lot of other things that are happening. Take paragraph 357 of a Department of Social Security paper :

"Consider replacing SERPS entirely with occupational and personal pension schemes."

There has been a lack of enthusiasm and an underselling of SERPS, which has made a significant contribution to present problems. We understand that the Securities and Investments Board will move on to consider the problems of those who have contracted out of SERPS once it has completed its complicated and important inquiries into transfers from occupational pensions. It would be helpful if the Minister could confirm that and comment on how he imagines compensation can be given to those who have clearly lost out and been disadvantaged. It may be that the industry will have to foot that bill, but the Government have more than a moral responsibility to ensure that that happens. I am interested to learn whether the Minister is now prepared to accept that mistakes were made-- that there was error and a failure to give proper warning--and what are his proposals for making redress.

I shall deal now with occupational pensions and the way in which bad advice and sharp-selling techniques have resulted in people transferring from occupational to personal pension schemes. Some 11 million people are in occupational schemes. It will be no surprise to hon. Members to know that we regard their strength as vital. It is important that those who have been involved in occupational pensions and have contributed to them can look forward with confidence to retirement. There is no doubt that public confidence was shaken tragically by the wicked fraud carried out by the late Robert Maxwell, but there is another scandal of which we are becoming aware and which may be of greater proportions. It may be cumulatively more damaging. It is less dramatic because it does not involve the death of an individual at sea and the same smell of scandal. There is not one person on whom the spotlight can concentrate, but the system has allowed many people to be tempted. It has allowed many people in the industry to abuse trust and make a mockery of professional ethics. Many people have left occupational pension schemes and are prejudiced in their retirement prospects as a result.

This is not a matter for fine judgment. We all know that LAUTRO has said that it is hard to conceive of circumstances in which it is right for someone to leave an occupational pension scheme in which he or she could have a continuing interest in order to transfer to a private pension policy.

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There are problems of charges, commissions and instability of outcome, but the essence of the problem is that people have surrendered the employer's contribution. That makes no sense, yet it has happened on a wide scale. Even where a person has left the industry and is in an occupational pension scheme in terms of preserved rights, he or she must still be extremely careful before attempting to move. In the mining industry, for example, some people have been taken to the cleaners in a deplorable way by moving to a personal pension scheme that looks attractive on the surface but provides no widow's benefit, life assurance cover or any of the other factors that would be highly relevant to the individual concerned.

Mr. John Greenway (Ryedale) : As the hon. Gentleman will discover if I am lucky enough to catch your eye later, Mr. Deputy Speaker, I have sympathy with much of what he is saying. But does he accept that many miners, for example, left occupational pension schemes because they were disgusted with the treatment that they had received and wanted nothing whatever to do with the mining industry in future ?

Mr. Dewar : I shall wait with interest to hear what the hon. Gentleman has to say. But to try and shift the blame and suggest that people cut off their noses to spite their faces in a fit of pique is extraordinary. If people were in that turn of mind, those selling policies had a duty of care to advise them that they should do nothing in haste or anger. I am afraid that that duty of care was not exercised.

Mr. Eric Clarke (Midlothian) : I was a member of the trustees of the miners' pension fund. We had to counteract the propaganda that was put out to those individuals by giving them the facts. I admit that the situation had been going on for some time and we did not spend a lot of money on advertising, as those people did. But I assure my hon. Friend that we gave the facts and tried to counteract the propaganda. There is no way that people just opted out. When redundancies set in, the salesmen came in.

Mr. Dewar : I accept entirely what my hon. Friend says. I know, from my personal contacts, of the efforts that were made by trustees of the miners' pension fund and many individuals in the industry to try to make good the evident lack of impartial advice available to those contemplating a transfer.

It is important to estimate how many people are involved in transfers. I accept that the figure that is often bandied around, of up to 500,000 people, may be an exaggeration. That number of people is potentially at risk, but I am quick to concede that we do not know how many are actually at risk and have suffered loss. Everyone who has had the staying power to remain in his or her seat for a debate of this kind will be familiar with the KPMG report commissioned by the SIB. Of 735 files, which were not taken from the down side of the industry--press reports say that both Standard Life and TSB were among the companies sampled--astonishingly, only 9 per cent. showed evidence of substantial compliance with the guidance and acceptable standards. In 77 per cent. of cases, no real financial analysis was made of the potential customer's situation ; in 95 per cent. of cases, agents of

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insurance companies failed to comply with good practice ; and in 89 per cent. of cases, independent financial advisers failed to comply with good practice.

Those are frightening statistics and a frightening profile of how the private sector carries out its duty of care to potential customers. As I said, it is not fringe companies but established blue chip firms that are involved. For example, a preliminary investigation by the Select Committee has revealed that Standard Life has 75,000 transfers, 15,000 of which are through direct sales and 60,000 of which are through independent financial advisers. I notice from its returns that Legal and General is having to make provision against compensation. The Refuge group is also making provision of £11.6 million in its accounts for 1993. That is an enormous sum given that its declared profits for that year are only £24.3 million. Many other companies, including National and Provincial, are also having to make provision in their accounts.

Yesterday, we had the extraordinary spectacle of Norwich Union--a household name of, I hasten to say, high standing--taking 800 of its staff off the road for a month for intensive training in selling techniques. That could be said to be good news, but it is also an indictment of what has happened that a company of that stature must take such extraordinary action.

Mr. D. N. Campbell-Savours (Workington) : The Economic Secretary, who is on the Government Front Bench today, was a member of Standing Committee E in 1986 and will remember the assurances given by the now Home Secretary that such a thing would never happen. The Opposition withdrew amendments because we were prepared to accept those assurances, despite the fact that the now Economic Secretary was busy lobbying Labour Members outside the door of the Committee Room to support amendments being moved against his own Minister. And he is now a member of the Government.

Mr. Dewar : I must simply accept from my hon. Friend what happened on that occasion, as I was not there to see it. Perhaps the Economic Secretary, who will close this debate, will deal with that interesting insight into how matters worked in those days. I will certainly be in my place to hear him and I am sure that my hon. Friend will be in his place, too.

I do not wish to spend much more time discussing examples, as they have been in the press and we have all seen them. They include teachers, policemen, miners and firemen. Some are now receiving compensation payments of £20,000 and more--I saw one of £50,000--to replace gaps in their occupational pension contributions, which may have run for only four or five years. The case histories are frightening ; they are also frighteningly familiar--sweet-talking, diagram-drawing, word-juggling salesmen persuading people to take action because they were interested only in the kill and the commission that it brings. That is the only conclusion that can be drawn from what has happened. It is a cruel deception.

Sometimes, an ex-employee would be brought in to persuade his former workmates to move to private pension policies. I remember a case of a senior shop steward who, sadly, had been made redundant but saw a way out of his financial difficulties by taking a job with an insurance company and flogging policies to his former colleagues. The fact that he did not last long with the insurance company adds to the despair and dishonour of the story.

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Mr. A. J. Beith (Berwick-upon-Tweed) : May I confirm what the hon. Gentleman has said ? The insurance companies were taking on redundant miners simply to get from them the names of other redundant miners so that they could approach them and sell policies to them.

Mr. Dewar : I am sure that the Secretary of State will condemn that when he has the opportunity.

Such problems are built in when an industry's sales force lives by commission. It then becomes extremely difficult to create a system that holds the interests of the customer in high regard. Until we can move away from that heavy dependence on commission, I fear that even the most respectable firms will have great difficulty in performing as they should.

There is even something about the language. It seems an odd point to make, but I noticed that Hill Samuel, which is part of the TSB group, is selling its financial services arms and handing over its direct sales force to Allied Dunbar, a subsidiary of BAT. The chief executive of Hill Samuel, Mr. Hugh Freedberg, explained why he was selling to Allied Dunbar by saying that a life company needed "a warm, captive customer base".

He explained that he did not feel that he had a warm captive customer base.

Perhaps I am being over-sensitive, but that seems an interesting insight into the attitude of very senior management. At the end of the day, it is they who must take responsibility for what happens on the ground. They cannot shrug it off by saying that a salesman went out of control or went native. It is an insight into how senior management view the industry.

I welcome some of the changes which no doubt the Minister will mention : the SIB report, a cooling-off period of 14 days, a duty to check on the lump sum that would result from the occupational pension scheme and a reasons-why letter. All that may be helpful, but it is also necessary to look at commissions and charges.

I have made some inquiries, as best I can, with people within the industry. I understand that when buying a policy on an annual basis, it is common to pay 50 per cent. of the first year's premium in commission. There may be another 20 per cent. for supervisory commission and another 20 per cent. for administrative costs, advertising costs and so on.

The Minister may be interested to hear about an odd happening a few years ago, when the Office of Fair Trading decided to inject competition into the industry. It therefore removed the need to stick by LAUTRO and agreed rates. Commission rates then went up. They went up because there is no competition if customers do not know what they being charged ; they are there to be plucked.

Paying lip service to competition was damaging the interests of the buying public. I believe that we must have transparency and disclosure. I welcome the fact that new rules will apply from 1 January 1995, but it is not enough. We must work harder to give people the right advice, to make sure that they know the facts instead of having to look at the complicated tables they might find in Money Management .

People need more accessible league tables. The Minister and his colleagues are fond of league tables. More accessible league tables, on performance for example, might be a useful tool.

Mr. Michael Colvin (Romsey and Waterside) : Does the hon. Gentleman acknowledge that sales on commission only were one of the root causes of the problems

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surrounding homes equity schemes, which we have debated at length in the House ? Salesmen in receipt of commission only, brandishing respectable cards from distinguished insurance companies, were able to hoodwink innocent people into parting with large sums of money. That led to the collapse of those schemes and all the problems and resulting heartache.

Mr. Dewar : I agree entirely. There was downright cruel abuse. The trouble was that the self-regulatory organisations in the industry could not get to grips with it and stop it. That is one of the worries ; it is a good example of treating too easily all the talk about a new start with a new SRO.

Finally, I turn to effective regulation and the need to examine commission charges. I understand--and I underline that word--that there are statutory powers to set charges that have been used only in a limited way. Perhaps the Minister will confirm that those powers exist and say a word or two about his intentions in that respect. There is no doubt that the abuse of commission and the lack of transparency are a real problem.

My contention is that the present system of regulation has failed. The Minister may be tempted to argue, as others have told me privately, that massive evidence of abuse is an advertisement for self-regulation. I have been told that, without the success of self-regulation, we would never know that people were being done and diddled left, right and centre. I hope that the Minister will not use that argument and will recognise that it does not wash.

There have been departures from acceptable standards on such a widespread scale that the problem is now endemic. As the hon. Member for Romsey and Waterside (Mr. Colvin) made clear, the SROs in profusion, lined up in column of route, have been unable to do anything about it.

The latest one is the Personal Investment Authority, the PIA, which perhaps is just about to reach the starting line. I do not disagree that taking FIMBRA, LAUTRO and parts of IMRO and simplifying the system may be better than what went before. My hon. Friend the Member for Edinburgh, Central will say more about this, but the history of the PIA so far has not been encouraging. We have lost one chairman, Sir Gordon Downey, and acquired Joe Palmer of Legal and General. I am not sure where the balance lies, but it has also spent about £6 million on starting-up costs and all we have is a first-class row between various people about whether they want to have anything to do with it. The Prudential, for example, was a big player in the market and takes the view that direct regulation without self- regulation is the right answer.

We also know that Standard Life has withdrawn its support from the PIA. I have seen the memo that Jim Stretton on behalf of Standard Life gave the Treasury and Civil Service Committee. Talking about the present system, he said :

"The resulting structure is unnecessarily cumbersome, inadequately accountable and will, because it is still called self regulation, be less trusted by the public. In addition the multi-tiered approach to regulation is unlikely to give rise to the firmness of purpose which I believe to be essential. I don't think we can go back to true self-regulation, since it would appear to the public, albeit unfairly, that the industry has acted to minimise its own regulation . . . Regulation should be carried out by a single tier body which, if it is not part of a Department of Government, should report directly to a Department of Government".

It is clear that the PIA will have a large job on its hands convincing not only the public but part of its own industry.

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