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13 Mar 1998 : Column WA85

Written Answers

Friday, 13th March 1998.

Mis-sold Personal Pensions

Baroness Castle of Blackburn asked Her Majesty's Government:

    What progress has been made towards resolving cases of personal pensions mis-selling, and what further action will be taken to see that all those mis-sold a personal pension receive redress.[HL1022]

Lord McIntosh of Haringey: A table showing what further progress has been made in the period up to 28 February 1998 by the 41 firms the Government have been monitoring has been placed in the Library.

Continuing the trend established in recent months, the table shows that the firms have made further progress during the month, and that about 65 per cent. of the cases identified for review are now completed.

The general trend hides a wide range of different performances. A few firms--eight in all--have yet to complete even half their cases. One is still some way short of the 10 per cent. mark. At the other end of the scale, seven of the 41 firms being monitored by the Government have now completed over three-quarters of their cases identified for review.

Previous announcements have underlined the importance that both the Government and the regulators attach to all firms, including small firms, taking all possible steps to complete their reviews. The Government have also made clear that firms will not escape sanction if they fail to act. That was not an empty threat. Earlier this week, the Personal Investment Authority (PIA) announced it was investigating apparent failures to meet the regulator's targets for completing the most urgent case reviews in respect of about 600 small firms, with a view to taking disciplinary action. The firms concerned should have completed at least 90 per cent. of the top priority cases--which include people who are already retired or have died--by the end of December 1997. Far too many small firms appear to have failed to tackle even these most pressing

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cases. This is simply not acceptable, and PIA's action is to be commended.

As noted above, a number of large firms have resolved over three-quarters of their cases. Some of these firms are now getting close to the point where they will have completed their priority cases. This is welcome news. However it highlights the importance of looking forward beyond the first phase of the review of pensions mis-selling. The first step has rightly been to address the more pressing categories of cases--for example, the cases of those who are most likely to have lost out and those either in or close to retirement. But they are not the only victims of pensions mis-selling and it is now important to look ahead at how to address the less pressing cases, which have in the past been referred to as "non-priority" cases.

The regulators--the Financial Services Authority (FSA) and the PIA--have this week issued a consultation document setting out proposals for taking forward the review of personal pensions mis-selling into its second phase. Copies have been placed in the Library. The Government welcome this step forward, which reflects the outcome of research on the extent of the problem.

The document sets out the regulators' proposed approach for firms to tackle the second phase of the review, building on experience of the first phase. It is important to note that this policy is not yet finalised. The way forward must be practicable. It must work. That is why the regulators have chosen to consult.

This is particularly important given that initial research commissioned by the FSA suggests that it will be a large task--potentially involving as many as 1.8 million cases. Whatever the final figures turn out to be, it is clear that the scale is such that it is in everyone's interests that the process adopted is the right one. To that end the Government urge everyone who is involved or has an interest to participate in the consultation--including investors, occupational pension schemes and of course the firms themselves. In doing that, the Government hope that everyone will make constructive contributions. That is the only way to see that the final policy that the regulators adopt is the best way forward, in the interests of investors and ultimately in the interests of the industry.

Following is the table referred to:

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Progress by pensions firms in completing reviews of personal pensions mis-selling in the period to the end of February 1998.

Under 25 per cent. of cases resolved
25-50 per cent. of cases resolved
Lincoln National13,2391,3584,1481,0153,1332,1641634
Financial Options33910032181411338
Burns Anderson1,035247164966853538
Windsor Life9,4512,5591,7062641,4421,1791242
Abbey Life17,2514,1076,2888895,3993,2721948
50-75 per cent. of cases resolved
Friends Provident6,8319322,7914182,3732,0693050
Canada Life5,4982802,9615202,4411,9533650
Standard Life6,8995933,0289672,0611,8982850
London and Manchester8,1821,0453,8024833,3192,8753554
Royal & Sun Alliance15,6722,1467,3999066,4935,5133555
Hill Samuel5,9877602,8945862,3081,9623355
IFA Network251401047529261056
Sun Life of Canada26,6607,0469,5461,8367,7106,3122457
United Assurance12,7939007,8791,8556,0244,8103859
Allied Dunbar18,6893,1399,6773,0056,6725,1952861
Albany Life2,9135671,6621481,5141,1694065
Equitable Life7,3031,5633,4821,4222,0601,8062566
Commercial Union7,6781,1924,7057513,9543,4344570
Berkeley Independent12673171432271
Lloyd's TSB48,85310,10027,2925,95221,34018,5033871
Legal & General36,48014,44114,8561,53713,31910,5042973
M&E Network290159582236311173
Royal London12,0751,0828,8911,3697,5226,4395374
Norwich Union7,3442,1893,7026613,0412,6333675
Over 75 per cent. of cases resolved
AXA Equity and Law3,9257182,7366172,1191,9505084
Hogg Robinson2,0397951,0183576615562784

A: cases identified as requiring review.

B: of A, cases where investor was informed that information gained during assessment excluded cases from review.

C: number of assessments completed.

D: cases where the investor has been informed that no redress is due.

E. cases where redress has been offered.

F: cases where redress has been accepted.

G: cases where redress has been accepted as a percentage of cases identified for review ((F/A)x100).

H: cases completed, including exclusions, as a percentage of cases identified for review (((B+D+F)/A)x100).

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MV "Derbyshire"

Lord Cocks of Hartcliffe asked Her Majesty's Government:

    When they will publish the assessors' report into their survey of the MV "Derbyshire"; and whether they will order the reopening of the formal investigation into the loss of the vessel.[HL1041]

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): The assessors' report into the survey of the "Derbyshire", commissioned by the former Secretary of State for Transport, the right honourable Sir George Young and the European Transport Commissioner, is published today. Copies of the full report and its summary have been placed in the Library of the House.

As the assessors' report, and the survey material on which it is based, represents new and important evidence which could not be produced at the original investigation, we shall order the reopening of the formal investigation into the loss of the "Derbyshire". Before we do so we are inviting interested parties to submit written

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representations within 12 weeks on whether the formal investigation should be reopened in whole or in part, on what questions it should address, and on whether the rehearing should be held by a wreck commissioner or by the High Court.

Arrangements are being made to allow interested parties to examine the survey material collected by the assessors.

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