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As I said in Committee, the market for long-term care financial products is new and relatively small, though it is developing. The products are sometimes complex. There is as yet not enough claims history to provide a track record to discover whether the cover that is ultimately provided matches people's expectations of what they thought they were buying.
I referred in Committee to the work of the Treasury committee, which was established to explore with the financial services industry how long-term care insurance products and other financial products could best be designed, to see whether they could be made more attractive to a wider audience. The committee comprises representatives from the industry and consumers, as well as some academics who specialise in this area. The committee has been reviewing how the best features of existing products, coupled with good practice and an appropriate degree of regulation, can be combined to make long-term care insurance products a safe and attractive proposition for as many people as possible.
We expect the committee to report by early stages of the summer. I am assured that the committee has made a great deal of progress in a complex area. Among other things, it has discussed existing products; how they are sold; the desirable characteristics of each product; as well as topics such as the claims criteria, claims procedure, people's understanding of what they were buying, and what good practice might entail.
In developing product design criteria, the committee is considering cost and reliability as well as ease of understanding and competition. The committee is also considering how providers can be encouraged to market acceptably designed products, for example, through disclosure, benchmarks, minimum standards, codes of conduct and invitations to tender.
As will be clear from what I have said, the Government need to go through various processes before finally resolving this matter. These include completion of the process of regulatory impact analysis and the necessary consultations with interested parties.
However, provided that that work confirms, as my noble friend Lord Lipsey clearly expects it will confirm, that regulation will be proportionate and effective, we shall aim to include long-term care products in the regulated activities order, often referred to as the scope order, which will follow the
I undertake that we will give the House a full report of our conclusions, with a clear timetable for future action, at the time when the order is debated. The Government intend to lay that order before Parliament as soon as is reasonably practicable. We are determined--to pick up a phrase used by my noble friend Lord Lipsey at an earlier stage--that the stable door will not be left open so long that there is a serious risk that the horse will bolt.
The Government are grateful to those who have expressed concern over this matter. They have given us a welcome opportunity to set out our views more fully and, I hope, to alleviate the real concerns which have been expressed.
Lord Lipsey: My Lords, I am extremely grateful to the Minister for what he has said. His words are so moving as to reduce the House to silence. I could not have put his concluding words better had I drafted them myself.
I would like to thank noble Lords on all sides of the House who have supported me in our discussions of the regulation of long-term care. I would also thank the Minister, the Economic Secretary and the Treasury team for the time that they have devoted to the matter, for their consideration and for their sympathy. In truth, I do not think that there was ever much between us, and now there is nothing.
At one point a newspaper reported that the Treasury had caved in on this matter. The Treasury never caves in, and it certainly did not on this occasion. Matters have been crystallised and clarified, and I believe that the Minister's statement will delight those outside Whitehall who have supported regulation. I hope that it will also delight the House, from which I will, with your Lordships' permission, withdraw my amendment.
As pointed out in Committee, in some circumstances, the purchaser may be a seller. That may be confusing and our original proposal was to substitute the word "purchaser" with the word "counterparty". In Committee, the Minister acknowledged the point and said that he was unsure
Meanwhile, the other government amendments are welcome. As we have said on previous occasions, both in another place and in Committee in your Lordships' House, with respect to Clause 26, the only test for enforcement of an agreement should be whether it is just and equitable. I am delighted to say that the Government have now made it clear that what are now the issues, formerly conditions, are not fatal, even if they are answered in the negative, although the court may have regard to them.
The amendment to Clause 27 is to the same effect as that to Clause 26. It makes enforcement depend only on whether it is just and equitable, albeit that it requires the court to have regard to the question as to whether the deposit-taker really did believe that he was not contravening the authorisation requirement.
The series of amendments to Clause 28 makes the same changes in relation to the enforcement of agreements entered into pursuant to unlawful financial promotion communications, as do the amendments on the question of enforceability in Clauses 26 and 27 in relation to carrying on business without authorisation. Those amendments are also welcome.
However, I make one small point. I have noticed that in the new subsection (5A), line 3, after the words "under the agreement", there should be inserted the words "or obligation". That was missing in earlier versions and it appears to me that the omission has been carried forward. I beg to move.
Lord McIntosh of Haringey: My Lords, I have a complicated but friendly message on Amendments Nos. 61 to 64 and 70. I ask the noble Lord, Lord Kingsland, to withdraw Amendment No. 61, which changes the tag or label in Clause 24 from "purchaser" to "other party" so that we can consider in what form to bring it back on Third Reading.
The simplest thing may be to leave "other party" as it is in Clause 24 and not to have any tag or label at all rather than to put a new tag "other party" so that the phrase is not repeated, as the Bill would read were the amendment to be accepted. If the noble Lord, Lord Kingsland, will withdraw Amendment No. 61, the Government can then agree to opposition Amendments Nos. 62, 63, 64 and 70 which all take out the word "purchaser" and replace it by the words "other party". If that is done, we shall make speedy progress.
Government Amendment No. 72 deals with deposit-taking and third party breaches. That would introduce a new clause dealing with deposit agreements entered into as a result of illegal regulated activity by a third party. The need for the third party provisions in Clauses 25 and 26 arises from the fact that advising on and arranging deals in investments
But in the case of deposits, a similar situation does not arise. It is only the activity of accepting deposits that is intended to be a regulated activity. As now, there will be no third party activities--for example, advising or arranging--which could be carried on by a third party in contravention of the general prohibition in relation to deposits and which could lead to deposit-taking by an authorised person. So making equivalent third party provision for deposit-taking would be an unnecessary complication.
I turn now to government amendments to Clauses 26 and 28. I wrote to those noble Lords who took part in the debate in Committee or, indeed, at any stage, with what I believe is called a "Keeling schedule"; in other words, a text of how those complicated amendments will read when inserted into Clauses 26 and 28. I am already grateful to the noble Lord, Lord Kingsland, for his support for them because they establish the just and equitable test as the sole test on which a court must be satisfied in order to enforce an agreement where that agreement is the result of some breach of either the general prohibition--that is, the prohibition under Clause 17 on carrying on regulated business without the necessary authorisation or exemption--or the financial promotion prohibition under Clause 19.
Where the provider--that is, the person carrying on the regulated activity--is doing so in contravention of the general prohibition or where the agreement results from an illegal promotion that the provider himself has communicated, the court is directed to consider whether the provider reasonably considered that he was not acting in breach.
Where the provider has not committed any breach but the agreement results from a breach, of either prohibition, by another person, the court is directed to consider whether the provider knew that the agreement resulted from a breach. As has been acknowledged, the amendments respond to the point made by the Opposition in another place that the court should have flexibility to judge what is just and equitable in difficult cases, and not be bound absolutely by the "reasonably believed" and knowledge tests.
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