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Lord Joffe: I, too, wish to express my support for the amendment. As other noble Lords have said, the products are very complex. I know just how complex they are because, with the noble Lord, Lord Lipsey, I sat on the Royal Commission for the care of the elderly and we were required to analyse these products. With some experience in the field, I, frankly, was unable to understand them, or certain sections of them.
It seems strange that consumers of even simple products like unit trusts are fully protected, even when the amount at risk and the risk of mis-selling is small. If this is so, what is the logic for the decision not to regulate long-term care products when they are so complex and the most vulnerable members of society are at risk? Indeed, it could be interpreted as a caring government discriminating against the elderly rather than in their favour.
Every organisation that is concerned with consumer protection, ranging from Age Concern to the Consumers' Association, has underlined the importance of regulating long-term care products. Even the insurance industry, which has opposed much regulation over the years, has called for the regulation of long-term care products. The reason is self-evident: the industry knows the extent of mis-selling that is likely to take place and is desperate to avoid yet another assurance mis-selling scandal.
Based on my 30 years' experience in the life assurance industry, my five years campaigning for effective regulation and my chairmanship of the complaints sub-committee of LAUTRO, the previous regulator, I reluctantly predict that if the Government do not regulate long-term care products now they will have no alternative but to do so within the next five years. By the time they then do so, there will be a significant number of elderly people to whom products will have been mis-sold and it will take much time and effort to seek to compensate them. Just as with the Home Income Plan selling scandal, a significant number of these victims will go to their graves before they have been compensated, with their last years having been blighted by the mis-selling that the Government had the opportunity to prevent.
Lord Newby: In rising to speak in the debate at this stage, I realise that I am in danger of exemplifying the old adage that everything has already been said but not everyone has said it. Therefore, in associating these Benches formally with this amendment, I want to stress what is, in a sense, the central juxtaposition of the reasoning behind the amendment. On the one hand, as we have heard, there is the immense complexity of the product being regulated and, on the other hand, there is the peculiar vulnerability of many of the people who are considering whether to purchase it.
In many cases, the person who is considering whether to buy the product for the first time is already frail. But, more importantly, such a person may have recently become a widower or a widow and will, therefore, feel much more vulnerable than he or she has ever felt before. There is a particular need for such people to have confidence in the products that they are being asked to purchase. Moreover, those products should conform in such a way as to make it easier for such people to consider them rationally. Therefore we on these Benches--both Front-Bench and Back-Bench speakers--have no difficulty at all in enthusiastically supporting the amendment.
Lord Saatchi: As my noble friend Lord Jenkin has said, these Benches are in favour of the amendment. I wish to express that clearly. Given the range of support for the amendment throughout the Chamber, it would be a great pity if the Minister did not say something positive and constructive about the attitude that the Government might adopt to the clause we are discussing. It would be sadly backward looking on the part of the Government if they did not take the point made by the noble Lord, Lord Lipsey; namely, that this market is bound to grow. For the reasons that have been stated by the Liberal Democrat Benches, the time is overdue for these products to be brought within the regulatory guidelines.
I do not mention the following figures to make a party political point, but do so strictly in support of the amendment of the noble Lord, Lord Lipsey. Every opinion survey shows that the public consider that the state of the NHS and healthcare is the number one issue facing the country. Research which probes more
Lord McIntosh of Haringey: I assure the noble Lord that ideological distaste of private healthcare has nothing to do with the Government's response to the amendment. It is important to state that we do not place any emphasis on whether the amendment is technically correct. I said in response to the previous debate on mortgages that we were able to introduce regulation of mortgages without any amendment to the Bill. We would be able also to introduce regulation of long-term healthcare products without any amendment to the Bill. That is not the issue between us. We are talking about content, not form. If we want to introduce such regulation, we could do it by means of a statutory instrument subject to an affirmative resolution procedure in both Chambers. That would be the correct way to do it without introducing a regulated activities order within 28 days of Royal Assent.
We understand the nature of the amendment. We understand the nature of the arguments which have been unanimous as between speakers on all sides of the Committee. We have listened carefully to what has been said. I think that it is recognised that we are discussing a new market where products are at an early stage of development. The market could evolve rapidly and most Members of the Committee appear to think that it will. We need to take account of that in our decisions about regulation. That is why we are working with industry to understand the way in which the products and the market are developing and have established a committee which comprises industry, the public sector, charities which represent the elderly population's interests and the financial services regulator, with a remit to see how long-term care insurance and other financial products could be made more attractive to a wider audience. We are concerned at all times to operate on the basis of sound regulatory practice. This means that before introducing new regulation we are anxious to carry out appropriate consultation and assessment of the costs and benefits.
We have made that guiding principle clear. We wish to see a light touch where possible, but we want to ensure that there is consumer protection where necessary. This considered approach to consultation and assessment of costs and benefits is implicit in the Opposition's Amendments Nos. 103 and 137--which we shall discuss shortly--which would require the Treasury to consult before extending regulation.
We do not take lightly decisions to impose new regulations, but that does not mean that we will let the need for proper consideration cause unnecessary delay. On the contrary, we have no intention of waiting until evidence of actual consumer detriment occurs before taking action.
When the Committee reports in the summer we shall have a better idea of the future size and shape of the market. We should then be able to assess in more depth the risks to vulnerable consumers; we should be able to form a judgment as to their needs in respect of information and other forms of protection; and we shall be better able to assess the products, including the complexity described, whether sales of those products fall technically within areas already subject to regulation, and the costs and benefits of further regulatory options.
I have listened with great sympathy to all noble Lords who have spoken in favour of regulation. I think that there is less of a gap than there may appear to be at first sight between the Government and those noble Lords. We shall want to mull over the debate between now and Report stage to see whether we can find a way forward that meets the concerns expressed by noble Lords today.
Lord Northbrook: Before the Minister sits down, he mentioned dealing with these issues about mortgage regulation and long-term care by way of regulation. I do not understand why they cannot be put on the face of the Bill if he is genuinely sympathetic with the comments made on both subjects.
Lord McIntosh of Haringey: I do not know how much of the previous debate the noble Lord attended, but we have debated in considerable detail the relationship between Clause 20 and Schedule 2. We have debated the fact that Schedule 2 is an indicative list of the scope of regulation, but not a complete list. We have made clear that the Government will implement, if you like, both Clause 20 and Schedule 2 by the regulated activities order which will be introduced after Royal Assent. That will set forth on a committed basis, on a formal basis, those activities which are to be covered. But it will be done through secondary legislation rather than by amendments on the face of the Bill. It will be done that way because financial markets change over the years and we shall want to change the regulatory activities order from time to time when new products appear and new financial markets arise. We shall want to do that without having to change primary legislation by amendments to this Bill.
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