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Mr. Henderson: The advice that I gave in my original remarks was that the area of Luxor is not safe and persons travelling should be extremely wary about entering that territory.
I repeat that there is no justification at all, under any circumstances, for the action that was taken yesterday and the horror that it caused to families and citizens of this country and others. If one were to ask an analytical historian the cause of troubles in the middle east area over the centuries, one would be unlikely to receive one response, as there are many approaches. Obviously, however, it does not help for the peace process to be logjammed, and something must be done to get things moving, so that people in these areas have greater hope and reassurance.
Mr. Crispin Blunt (Reigate):
Does the Minister agree that the worst outcome would be for the tourist industry in Egypt to be destroyed? Does he further agree with my rough calculation that, even in the wake of yesterday's appalling and tragic events, a visitor to Egypt is 30 times more likely to die of natural causes than to be involved in a terrorist incident? Will his advice to travel companies reflect what is statistically likely to happen to people?
Does the Minister agree that the British people must stand shoulder to shoulder with our friends in Egypt against terrorism--a scourge that, unfortunately, we have both endured--and that the Foreign Office must be as robust as possible in its advice to tour operators and individuals, so that the risks are understood but encouragement is not given to unnecessary panic, which seems to have happened this morning?
Mr. Henderson:
I can assure the hon. Gentleman that there will be no panic reaction by my Department, but we have a responsibility to provide advice to British tourists on the dangers that they may face when they travel. Our assessment is that there are serious dangers at the moment in Egypt, and there have been for some time. I explained in specific terms in my initial remarks what those were. We shall continue to monitor the situation day by day, and continue to give the best advice that can be given. Nevertheless, we shall want to help to promote tourism to Egypt, and that will be a continuing item in the dialogue with the Egyptian Government.
3.54 pm
The Economic Secretary to the Treasury (Mrs. Helen Liddell): With permission, Madam Speaker, I would like to make a further statement on the mis-selling of personal pensions.
On 9 July, I reported to the House on the progress being made by individual firms with most cases to put right in what is possibly the most extensive scandal ever seen in our financial services industry. Each month subsequently, I have published the latest facts available to me. Today I have placed in the Library further information about the progress being made.
We are now seeing positive results from the pressure applied since this Government were elected. In May, only 2 per cent. of cases had been compensated. Now there has been a sevenfold increase in the number of people receiving compensation--proof that, in the cold glare of publicity, firms can raise their game and make progress. However, more could and should be done.
Before I go into more detail, it might assist the House if I recall the events that led to this scandal. The Social Security Act 1986, a much-vaunted piece of legislation by the previous Government, encouraged millions of people to change sound pension arrangements for something different, in the belief that they would be more secure in later life. Some will be; not all, however. For some, the change meant a future less secure, not more so.
Between 1988 and 1994, life insurance companies, independent financial advisers, banks and building societies, through vigorous marketing, sold more than 5 million personal pensions. It soon became clear that that meant disaster for many, including hundreds of thousands in the nursing, teaching and other professions, who had been persuaded against their best interests to abandon the safety of their occupational schemes.
The truth is that many firms did not abide by the regulatory rules then in force, requiring them to give suitable advice. Among those firms failing their customers were many household names. The Securities and Investments Board in 1994 took the unprecedented step of requiring firms to review the cases of those most likely to have suffered. The scale of the problem can now be seen. Some 600,000 cases are currently being reviewed, and on current indications the cost of compensation will be at least £2 billion.
Deadlines were set for completing the most urgent reviews. Those were well missed, and the previous Government stood by and let that happen. On 14 May this year, I met heads of 24 firms, responsible for about three quarters of the total of cases. I left them in no doubt about our determination to ensure that those wasted years would be redeemed.
Most of the big firms are making headway--indeed, some of them have made large strides--but far too many firms, from large insurance companies to small independent advisers, have been far too slow to act, and some have hardly even started. They have failed to grasp the severity of the situation.
The experience of the past few months shows that pressure from the Government, the regulators and the public is working. I intend to maintain that pressure until the review is completed. In May, the regulator set hard
but realistic new targets for all the firms concerned, and made it clear that there would be robust disciplinary action. For most firms, the first of those targets is to complete 90 per cent. of the most urgent cases by the end of next month. Beyond that, they must complete all their priority reviews by the end of next year, at the very latest. When they reach that target, I shall remove their names from the list that I publish each month--although they must continue to update me on their progress.
The recent reprimands and fines against firms such as the Prudential, Friends Provident and DBS have attracted wide publicity. This disciplinary rigour will continue. However, the Government and the regulators recognise that, in respect of some companies at least, those sanctions may not be enough--they are not galvanising the laggards. For them, a stronger armoury of sanctions is required. The Personal Investment Authority is working to achieve that through individual registration, and the new regime will come into force as soon as possible next year.
Once that regime is in place, sanctions can be fine-tuned to apply pressure directly on those responsible. Individual directors, managers or sales people found to be at fault will face the prospect of fines, public reprimands or restrictions upon the type of work in which they may be involved. In extreme cases, they could be expelled from the industry.
The public have a right to know about these failures. At present, the PIA has the power to require firms to advertise their misconduct and the grounds on which they have been disciplined. That power has been kept in reserve, but there is now every reason to use it to the full. The PIA is currently examining ways of ensuring that customers are informed directly of a firm's failings. The Government believe that the time has come for a tougher range of sanctions to come into play. The only way for a firm or an individual to avoid disciplinary action is to avoid the conduct that warrants it.
While putting right the wrongs of pensions mis-selling has been the priority, the Government have not lost sight of the fact that the financial services industry is central to our economic prosperity, and to the welfare of millions of people. However, its prosperity requires the confidence of the public. That is why the industry must act quickly to restore that confidence. If there is continuing evidence that some firms have refused to learn the lessons of the past few years and are still harming investors, we shall act to clean up the industry.
To this end, the PIA has the authority to intervene on behalf of the public and require that a firm ceases to market or sell some or all of its investment products for a period, and puts its house in order. Firms whose compliance with the regulator's requirements is so poor that investors are put at risk can effectively be put out of business. The PIA will use that power wherever it is warranted. Candidates for that action will include any independent financial adviser or any other firms found to be using the review process as a foot in the door to sell more products.
The regulators and the Government also have powers to protect the public by taking action to exclude senior people who are not fit and proper from involvement in financial services business. Those who are not fit and proper can be removed from their posts--and we shall see that they are removed. In the years ahead, the Government plan to introduce legislation that will have a profound
impact on the financial services environment. Lessons learned from the pensions mis-selling episode will be in all our minds as we go about that task in relation to stakeholder pensions and individual savings accounts, and as we reform the regulatory regime itself.
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