Financial Services and Markets Bill

Baroness Altmann Excerpts

Report stage
Tuesday 6th June 2023 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I had the privilege of adding my name to this amendment because it seems to me, as has just been said, that this is such an important Bill for our nations. It also has this distinguishing feature. Regulation of financial services and matters of this kind is extremely complicated; it is very easy to get them wrong. Why do the Government not feel that they need the expertise of this House, which was so evident during the Grand Committee hearing on aspects of financial services? That completely defeats my understanding of the way in which we should have good government.

[Baroness Altmann (Con)]

My Lords, I add my support to the amendment so excellently moved by the noble Lord, Lord Sharkey, and I thank my noble friends Lord Hamilton and Lord Naseby, who have spoken about the dangers that are entailed if we do not introduce measures such as this amendment into the Bill. There is a risk of executive power-grab. I am not at all saying that that is the intention, but the possibility of that would be opened and surely, as we have just argued in the previous legislative discussion, it is so important that we ensure that Parliament has control, not a few Ministers. That is what I hoped we were going to do when we were revising the laws that had been adopted from the EU.

[Baroness Kramer (LD)]

My Lords, I can add very little to the extraordinary speeches we just heard, many of them quite brief but absolutely targeted and to the point. I simply want to add just two more issues that perhaps have been mentioned but not stressed.

The first is that a carve-out of financial services from the REUL Bill is not the carve-out of some minor area of insignificant interest. Financial services are in effect our largest and most significant industry at this point in time in the UK and will be for many years in the future, and indeed the products that come from financial services are the lifeblood of our economy, both for businesses and for ordinary people. Therefore, scrutiny of decisions that are made within this arena surely has to be a central and significant responsibility of Parliament.

I say to the Minister, who always prays in aid consultation, both formal and informal, in the process of making change, when did consultation replace scrutiny in the mind of this Government? Parliament is not a consultee but the body that is democratically elected to make the key legislative decisions about the future of our country. Its relegation to the role of a consultee, which in effect happens and which this legislation would in some ways counter, is, I believe, completely unacceptable to most people when they have the opportunity to face up to it and think through this issue. Therefore, we on these Benches are very much in support of these amendments, and if necessary we will go through the Lobbies if the Minister is unable to accept at least a significant one of them.

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[Lord Davies of Brixton (Lab)]

My Lords, I support the amendments in this group, particularly Amendment 93. It is always a pleasure to follow my noble friend Baroness Drake, who has said it all. I will join on the back of her comments to say that I strongly support the approach she has taken.

I also support Amendment 113 from the noble Baroness, Lady Hayman. I respect the extent to which some concerns have been taken into account to make it clear that the interests of the members are paramount in the amendment—that is crucial. On the idea that pension funds should have a more active role in growing our economy, obviously its time has come. It is not new—people have been making suggestions about it; I have been involved in it in the past—but there now seems to be a confluence of views that something must be done. However, it has to be done in a way that respects the fiduciary duty to put the interests of members front and centre in the decisions that are taken. I take a fairly broad view of what constitutes members’ interests, but it is the members and their trustees acting on their behalf who have to take that decision, rather than bodies which do not have the direct results inflicted on them if they get it wrong.

It is important to stress that any ideas have to be practical and effective. I have some doubt as to whether the problem we face is about the supply of money; rather, it is about how the money will be used. Putting these proposals forward without having the other side of the bargain improved will be a problem. It is also important to stress that there are very different types of schemes, and they all have different investment needs. Again, whatever guidance is given has to respect the particular types of schemes.

I have one concern, which I would like the Minister to address, about the phrase “have regard to” in relation to guidance. It appears in the government amendment and in Amendment 113 put forward and supported by my noble colleagues. The problem with the “have regard to” is that it is a legal lottery. It is very difficult to know in advance what exactly it means, so it would be very helpful to me, and I hope the House, if the Minister could say something about that. Is it, as is sometimes suggested, like the accounting requirement—you comply or explain—or do you have to, in some way or another, follow the requirements as they are set out? What does “have regard to” mean in this legislation? It would be good to have clarification during the progress of the Bill, because the phrase appears several times.

[Baroness Altmann (Con)]

My Lords, I congratulate my noble friend the Minister on her Amendment 4. I am sure that it is very well-intentioned, and it meets some of the concerns that were clearly expressed in Committee. I welcome the update that will be coming from her on the green taxonomy; I believe that there will be a consultation on that. There is also the new green finance strategy, which has been published. They are all welcome.

Amendment 4 is welcome, but, as the noble Baroness, Lady Hayman, explained, although it will ensure that the Treasury produces guidance or requirements for sustainable investing by pension schemes and others, it would appear that the FCA and the PRA may not have the powers to issue that guidance. So, once the Treasury has produced its recommendations, we will still need to legislate. Can my noble friend the Minister confirm that that is the case, and that we will need further legislation if we want to implement the impacts of Amendment 4 through to pension schemes?

I have added my name to Amendments 93 and 113 in the name of the noble Baroness, Lady Hayman. Amendment 93 deals with the investment duties of pension providers and investment managers, and Amendment 113 deals with the investment duties of occupational pension trustees and managers. Clearly, if we are to make progress in line with the Government’s laudable objectives—and I congratulate them on all the work they have been doing, including some of their world-leading work on trying to ensure that pension schemes invest more in line with green objectives and sustainable investments for the long term—the amendments will ensure that the FCA and the PRA can make those rules. The amendments are very reasonably drafted; the FCA and the PRA may make these rules, but they do not require them at this stage to do so. The trustees and investment managers must then have regard to the rules, but, as the noble Baroness explained, they can explain why they are not going to implement the rules. However, at least we can set up a system where the trillions of pounds of long-term investment money in pension schemes can assuredly do more to protect the planet and provide investment opportunities that will help with social objectives for this country.

I do not have a problem with the concept of government directing pension schemes to invest a certain proportion of their assets, if necessary, in green, sustainable and socially desirable projects, including infrastructure, forestation, nature preservation and so on. At least 25% of all pension schemes—we are talking about hundreds of billions of pounds—has come from the taxpayer in the first place in the form of tax relief. Given that 25% of everyone’s pension is tax free, that is money that was spent by taxpayers. Given the budget circumstances that the country faces, and as taxpayers would otherwise be funding these projects outside pension schemes, I do not think that it is impossible to justify the idea that, should the private sector not be forthcoming with its investments in these vital elements for future growth and for a sustainable future for us all, the Government might themselves decide to require it.

These amendments will at least pave the way to ensure that there is more chance of these huge amounts of money, which are put aside for millions of people’s retirement income later in life, being invested in a way that will benefit them and the economy, as well as ensuring that there is much more and better protection for the planet, which I know that the Government wish to achieve. So I support Amendments 93 and 113, and I have added my name to Amendment 114, so excellently explained by the noble Baroness, Lady Wheatcroft, again facilitating rules that it will be necessary for schemes to follow, should the Government desire that—which is the indication that I have had from my noble friend the Minister and which is implied in the Government’s Amendment 4.

[Baroness Meacher (CB)]

My Lords, I shall speak to Amendment 91—this is a somewhat variegated group. The amendment was very ably introduced by the noble Baroness, Lady Boycott, and I am privileged to be asked to speak to it—it has widespread support across the political parties and within the public, as well as from key figures such as Sir Ian Cheshire and financial institutions representing no less than £1.18 trillion in assets under management and advice.

The UK is in the invidious position of being a leading financier of global deforestation and linked human rights abuses. This country provided an estimated $16.6 billion to businesses implicated in deforestation over five years to 2020. How many of us have money in pension funds contributing to the £300 billion of UK pension fund money supporting high deforestation risk companies and financial institutions? The Government claim that the answer to this problem—if you like—is the Taskforce on Nature-Related Financial Disclosures. However, the Government’s own expert Global Resource Initiative task force has already explicitly rejected the TNFD’s disclosure-based model as a solution. It has told the Government that new due diligence laws are needed to stop UK finance flowing to deforestation —and that is precisely what this amendment does.

I am aware of the noble Lord, Lord Field’s rather wonderful Cool Earth charity, which finances indigenous tribes in the great forests to retain the trees and live within them. Amendment 91 is vital to prevent all Cool Earth’s good work being undermined by UK financial institutions investing in high deforestation risk companies. The UK led the Glasgow leaders’ declaration on forests and land use at COP 26, making a commitment to halt and reverse deforestation and land degradation by 2030, including by realigning financial flows. This amendment begins to meet that commitment; surely, this should not be neglected. My only regret is that the amendment allows for a 24-month delay before due diligence obligations come into force to allow the sector to prepare—and, of course, I understand that sectors need to prepare. But this issue has been debated in Parliament for some months. I wonder how far the sector has reached in its preparations and whether it would support a reduced delay. How does such a delay fit with the view of experts that commodity-driven deforestation must end by 2025 at the latest to limit global warming to 1.5 degrees centigrade? A 24-month delay takes us right into 2025. I understand that agricultural expansion drives more than 90% of tropical deforestation. Again, the amendment is business friendly and widely supported, and I hope that the Government will support it and accept it.

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[Lord Eatwell (Lab)]

My Lords, as a founding member of the Regulatory Decisions Committee of the Financial Services Authority who served from 2001 to 2006, I reflect on the fact that at that time the FSA took extraordinary care in preparing the documentation that was submitted to the RDC. This clearly had an effect on the way in which the RDC prepared itself. This is an important element in ensuring that our regulatory system is not only fair but seen to be fair. Having read with care the pamphlet from the noble Lord, Lord Tyrie, I support the arguments that he made there, which I am sure he recently repeated in the House.

[Baroness Altmann (Con)]

My Lords, I support all the work that the noble Lord, Lord Tyrie, has put into this amendment. He has worked for so many years and has so much knowledge on this subject. If my noble friend cannot accept the amendment today, I urge her to come back at Third Reading if possible, perhaps with the Government’s own proposals for at least a consultation, which would be a reasonable compromise. There is a strength of feeling on this issue.

As the noble Lord said, the FCA has already been clipping the RDC’s wings. We can see dangers and that there is huge support for proper independence on a statutory basis. We do not want the City to become an oligopoly; we need to protect some of these smaller firms for healthy competition. What is the Government’s objection to this proposal?

[Baroness Chapman of Darlington (Lab)]

My Lords, we commend the noble Lord, Lord Tyrie, on his amendment and on using it to raise important questions. We understand that concerns have been raised about the perceived watering down of the RDC’s role within the FCA. While we know that the Government respect the operational independence of the FCA, we hope that the Minister is able to say something about the regulator’s recent decisions on the RDC, which are causing substantial concern.

The FCA believes that the current balance of responsibilities is correct and that the recent reforms were necessary to ensure quicker decision-making. However, it would help if the Minister could outline what steps, if any, the Treasury might take in future, should it come to the view, if it has not today, that the system is not quite working in the way that it should.

Financial Services and Markets Bill

Baroness Altmann Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

[Lord Lilley (Con)]

We ought to allow the industry to invest as long as we are phasing out demand. If it invests too much, it is its problem. If it invests too little, it is our problem.

[Baroness Altmann (Con)]

My Lords, I declare my interests as set out in the register. I support many of the amendments in this group. My Amendment 241A is in this group. I have added my name to Amendments 201 and 237, which require FCA guidance about long-term returns for occupational pension investors. I think that is very important when considering climate change and is very relevant to the remarks of my noble friend Lord Lilley. I have also added my name to Amendment 235 as I think it is equally important for institutional investors in the UK to be equipped with some green taxonomy so that we have some standards by which we can measure the impact of climate investment.

As regards the issues raised by my noble friend, particularly, perhaps, in relation to Amendment 168, when I read that amendment it seems to me to be calling for a review. It calls for the FCA to review and perhaps guide pension schemes and insurance companies, which have very long-term liabilities, on assessing the long-term risks of investing in assets such as fossil fuels. There is a widespread opinion suggesting that over the long term, whether that is 20 years or 30 years —those timescales are relevant for Solvency II and the annuity books of insurers, for example—there is a significant danger in relying on the continued thriving of those large energy companies.

It makes sense. We have been taken by surprise too many times in the financial world by supposedly very small long-term risks which materialise in a cliff-edge event that people had not been prepared for. Whether or not the review concludes that there should be any change, it is appropriate that this review should be carried out, so I support the amendment, but I understand the points made by my noble friend. Perhaps, on a shorter-term timescale, given the need for fossil fuels and the work that is being done by those large companies to try to transition to more green energy, that is an issue that needs to be carefully weighed up by any investor who is considering the potential returns from their investment.

In the interests of time, I will now speak to my Amendment 241A. I hope that my noble friend will be interested in this amendment and, indeed, that other Members of the Committee might consider that there is merit in this proposal. It is a relatively modest reform. It would be deregulatory. It supports the transition to net zero and nature preservation and it would encourage innovation. I hope it would garner more of our domestic institutional asset base to be used for the kinds of investments that all of us who are concerned about the long-term impact of human activity on the climate and nature would want to see happen.

I thank the Public Bill Office and Susannah Street, as well as Peers for the Planet, for their assistance in trying to ensure that the amendment is in scope of the Bill, which was quite a feat. It is a probing amendment; I am not wedded to the wording, but the principle of the proposal would make it easier for funded occupational pension schemes to join together to establish fund managers under a lighter-touch regime that already exists in order to invest in and support climate and nature protection. We all know that there is a growing need to find the funding to rebuild, repurpose or have new infrastructure for low-carbon and nature-friendly projects. Indeed, nature’s impact on and interaction with climate change and net zero is increasingly recognised. These issues feature in the other amendments I have attached my name to, so I hope that the scientific and political consensus that we need urgent action might help my noble friend and the Committee recognise that this could be a win-win for pension funds to get better long-term returns, for pensions to be perhaps better than they otherwise might be, and for the economy.

Much of the investment needed to reach net zero will be in very large long-term projects. It is not always easy to find the money. Normally, perhaps, with a Government who were in a much stronger fiscal position than most western Governments now are, we might look to the majority of this being funded by government, but that is less likely at the moment. Yet we have in this country this enormous pool of long-term assets that is currently being encouraged to invest in assets with a much lower expected return or so-called safe assets—gilts and corporate bonds, for example—shunning long-term growth with equities and projects such as the one I have in mind for this type of approach. Only 100 schemes or so have more than £5 billion worth of assets. Even with the kind of forecast consolidation, it is unlikely that we will have very many of the £5 billion-type scale that is normally suggested to be required to put forward a prudent, risk-diversified portfolio of such infrastructure and other protective investments.

My amendment would facilitate asset pooling for the smaller pension funds as well, so they can all join together in FCA-authorised investment managers specifically for pools of pension assets to benefit from and contribute to the benefits for green growth and sustainable long-term returns for the specific purposes set out in proposed new subsection (3) of my amendment. The Local Government Pension Scheme is already starting to do this, but private schemes would have to use commercial fund managers, which often either deters such investing or incurs much higher costs, whereas big schemes such as USS and NEST are already looking to invest or have the expertise to do so, but they are not joined with the smaller schemes.

I hope that the currently existing lighter-touch regime that the FCA offers in its occupational pension scheme firm rules, which currently apply only to fund management firms that are wholly owned by one pension fund, could be applied to a combination of pension funds that are investing for their own purposes in the various schemes that belong to it. It is not commercially available or available to other members of the public, but it is for long-term pension investing.

I would be grateful if my noble friend considered this modest reform, or, if she feels that there is some flaw in the wording of the amendment that could be changed and still facilitate this, I would be happy if she, or indeed any other noble Lords, wanted to meet to discuss it. As I said, it is deregulatory, it supports the aims of net zero and nature preservation, it would encourage innovation and it should provide better diversification and therefore long-term risk reduction for a number of occupational pension schemes which otherwise could not take advantage of it.

Financial Services and Markets Bill

Baroness Altmann Excerpts

Committee stage
Monday 6th February 2023 Grand Committee

Amendment 231 basically covers a subject whose ground I have already covered, so I will not add any more other than to say in conclusion that these three amendments seek to empower consumers and create pressure points to force the suppliers of financial services and regulators to act with integrity and honesty.

[Baroness Altmann (Con)]

My Lords, I added my name to three of the amendments in this group. I will speak to Amendments 225 and 226 first. The noble Baroness, Lady Kramer, has expertly explained the issues surrounding the Equitable Life compensation scheme and the problems suffered by more than 1 million people who lost money through what was reputed to be an extremely strong and stable investment company. Even though the Parliamentary Ombudsman ruled that this was due to official maladministration across a wide range of actors, about 900,000 people have received only 22% of the compensation due.

I understand that taxpayer money is not a bottomless pit and that it is difficult when there is such an enormous number of people involved for any Government to consider this kind of compensation, but we have a Parliamentary Ombudsman for a reason. If a Parliamentary Ombudsman rules in a particular direction, it is troubling to me that the Government would suggest that they disagree with their own referee and therefore are not going to comply. The amendments from the noble Baroness, Lady Kramer, would require the Government to honour the recommendations of the ombudsman. I urge my noble friend to look seriously and carefully at how much has been paid out and to whom, and whether the Government can justify not complying with the recommendations of their own ombudsman.

I have personal experience in the case of the Financial Assistance Scheme where the Parliamentary Ombudsman ruled that government must compensate. The then Government in 2005-06 simply said that they were not going to and that they disagreed. We had to take the Government to court. They lost in the High Court and then in the Court of Appeal. It was only after that and at the risk of the complainants losing their homes and everything else, after also having lost their pensions, that in 2008, thankfully, a proper redress scheme was set up. So it is possible, but it was very much dependent on the Secretary of State at the time being willing to agree.

Amendment 120 in the name of the noble Lord, Lord Tunnicliffe, to which I added my name too, refers to the Financial Conduct Authority’s Consumer Panel. The amendment would like to see the Consumer Panel reporting to Parliament. At the moment this excellent panel is doing quite a bit of work trying to look at the interests of consumers. Clearly, consumers as a group and individually do not have the resources that the financial services industry has in order to promote their interests relative to those of the financial services companies. The Consumer Panel has often come up with important recommendations to the board of the FCA to look at and act on behalf of consumers who have been wronged in different ways. But Parliament generally does not tend to hear about what the Consumer Panel says, and the board of the FCA is at liberty not to agree or comply with recommendations of the Consumer Panel.

It would be helpful for parliamentarians, particularly Members in the other place representing their own constituents who may have been wronged in these cases, to know what has been considered by the Consumer Panel. I hope that my noble friend might consider this very reasonable amendment, which is just asking that Parliament is directly informed by the Consumer Panel of its concerns at actions taken by the financial services industry to the detriment of consumers.

That leads me finally to the other amendments in this group. The Consumer Panel has recommended that a duty of care is required in the financial services industry. As we know, Section 29 of the Financial Services Act called for a duty of care, and Parliament was supposed to introduce a duty of care, yet what we have is this consumer duty rather than a fully fledged duty of care.

Amendment 76 calls for a duty of care, and the amendments tabled and so eloquently explained by the noble Lord, Lord Sikka, Amendments 229, 230 and 231, also represent what could be considered a duty of care—as, indeed, does Amendment 77 from the noble Lord, Lord Davies, which talks about consumers with mental health issues, and how the industry looks after them. These are all extremely important for the Government to consider in strengthening the protection for the public.

To give one brief example, if noble Lords will indulge me, most recently we have had the problem of liability-driven investments and the dislocations in the government bond markets caused by the market turmoil a few months ago. For many investors in personal pensions—where the Financial Conduct Authority oversees the supposed “know your customer” and new duty of care requirement—the products and offerings given to ordinary members of the public in pensions under auto-enrolment and in other areas have default options, which the majority of workers are put into. They typically use what is called a life-styling or target date approach, which means that, in the approximately 10 years running up to retirement, those customers are switched out of assets with higher expected returns such as equities into what are meant to be safe assets such as bonds, in the expectation that they will buy an annuity when they reach retirement—and annuities are priced relative to bonds, so everything should be fine.

There is no duty on those pension providers to ask a customer once a year, for example, if they are planning to retire at the date that they are gearing towards or if they plan to buy an annuity. They may plan to keep the money invested. If that is the case, we have seen millions of people—potentially, certainly hundreds of thousands, although we do not have the number—who have been coming up to retirement and lost a huge chunk of their pension, because the price of those supposedly safe assets has fallen significantly. They were never asked whether they were going to buy an annuity, and the majority of them will not do so. No provider had any requirement to check with their customer, on something as fundamentally important as this, whether they planned to buy an annuity or even to take out any money at all at the date that the product automatically switches them to. Nothing has been updated on that since the pension freedoms were introduced.

That is just an example of where, I hope, my noble friend will understand that a duty of care must extend beyond where the industry is today, so that the interests of individuals are taken into consideration by the financial services industry.

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[Baroness Penn (Con)]

My Lords, the concept of a duty of care in financial services may be different to the concept of a duty of care in other contexts. This was considered very carefully and consulted on by the FCA in 2019 and in 2021. It considered these questions and the issues we have discussed in the Committee today.

[Baroness Altmann (Con)]

I thank my noble friend for giving way. On these consultations, did the financial services companies generally respond not wishing to have the right of redress? Were the consumer organisations in favour of it?

Financial Services and Markets Bill

Baroness Altmann Excerpts

Committee stage
Monday 30th January 2023 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to take part in this debate on the second day of Committee. I have to say that it has been an extraordinarily powerful debate thus far and an absolute indictment of the UK financial sector. I begin by apologising for not taking part in the first day of Committee, despite having signed a number of amendments. I am afraid I was taking part in the debate on the so-called Genetic Technology (Precision Breeding) Bill, and it is impossible to spread oneself across too many places.

The case for these amendments, in particular Amendment 40 in the name of the noble Lord, Lord Sharkey, to which I am pleased to attach my name, has already been powerfully made, by the noble Lord himself and by the noble Baroness, Lady Bowles of Berkhamsted, in the debate on the previous group of amendments. I will make a couple of additional points. In particular, I draw on a survey by the Federation of Small Businesses, published in December, which found that 30% of small and medium-sized enterprises thought that they had signed financial contracts that contained unfair clauses and provisions.

The survey also found that successful applications for loans and other financing for SMEs had fallen precipitously. Less than half were successful in the third quarter of 2022; before Covid, two-thirds had been successful. One of the things we are always hearing from the Government is, “Rely on the market! People can shop around and choose”. We have already heard the reality of the inequality of arms—as the lawyers would put it—between a small business and a giant financial-sector company. But there is also no opportunity: small and medium-sized enterprises have to take money from wherever they can get it, if they are lucky enough to get it at all.

What we have here is a practical reality, as the noble Lord, Lord Holmes of Richmond, just set out. The financial sector is not meeting the needs of the real economy, and that issue underlies all our debates on the Bill. Is the financial sector there as a high-stakes casino in which a few people can make a lot of money and the rest of us have to pick up the pieces when it all goes wrong, or is it there to meet the needs of the real economy and give us a genuinely sustainable—in all senses of the word—society?

Although we have perhaps not needed him, it is a pity that the noble Lord, Lord Sikka, is not currently in his place, as he could also have contributed very powerfully to this debate. What we have is a litany of disaster. The FCA has a terrible track record. Your Lordships’ Committee is trying to do something to fix that, and, boy, does it need fixing.

[Baroness Altmann (Con)]

My Lords, I too support both amendments in this group. I congratulate my noble friend Lord Holmes on his Amendment 219, and the noble Lord, Lord Sharkey, on Amendment 40 and the way in which he explained it. I urge my noble friend the Minister to take seriously the comments that have been made and the reference to the Treasury Select Committee, which recommended just this kind of change.

I would like to understand from my noble friend: if the Government do not agree with the Treasury Select Committee, why? How do they believe that SMEs are protected against the kinds of scandals and bad behaviour that have clearly been rife within the sector over a number of years? Does my noble friend seriously believe that small and medium-sized enterprises are equipped enough to stand up against the information and resources available to the financial services industry to avoid the kind of problems that we have seen in the past?

[Baroness Kramer (LD)]

My Lords, the last group of amendments and this one are not identical and cover different aspects of abuse by financial institutions. Were the Government to accept them, together, or to draft their own versions, that would completely change the playing field. Small businesses would be in a position whereby they could breathe easily and make business decisions, and not worry that, embedded in whatever product they were purchasing—

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[Baroness Penn (Con)]

I note that it is a voluntary body. I do not have the list of those who have signed up to it to hand. If it differs from those outlined by the noble Baroness, I will write to the Committee, but she may well have listed those who have signed up to it. I note, however, that the combination of that service, and the scale of those involved in it, with the ability to go to the Financial Ombudsman Service means that research suggests that more than 99% of UK businesses can access independent dispute resolution. We should look at the size of the customer base as well as the number of organisations signed up to such dispute resolution mechanisms. I will write to the noble Lord, Lord Sharkey, on the number of cases taken by the organisation.

[Baroness Altmann (Con)]

I thank my noble friend for giving way, but perhaps I could press her a little more on the effectiveness of the Financial Ombudsman Service in providing a deterrent against poor practice in the areas where we have seen it in the past. The noble Baronesses, Lady Bowles and Lady Kramer, and the noble Lord, Lord Sharkey, have outlined instances of banks not treating their customers well. Does my noble friend agree that having a statutory duty written into the legislation would be much more of a deterrent against the behaviour we have seen than the potential threat of someone going to the Financial Ombudsman Service?

[Baroness Penn (Con)]

That is one element to be considered. I was pointing in particular to the combined role of the FOS and the Business Banking Resolution Service in providing a route of redress for over 99% of businesses. In part, it comes back to my question in relation to Amendment 40 from the noble Lord, Lord Sharkey, on the Government’s commitment to regulating business lending only where there is a clear case for doing so, given some of the increased costs that bringing SME lending into regulation would bring. I return to the point that we currently have a consultation out on the Consumer Credit Act in which there is a question on business lending; the Government are considering this through that consultation.

With that, I hope that the noble Lord, Lord Sharkey, will withdraw Amendment 40 at this stage—

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[Baroness Penn (Con)]

As I hope I was setting out for the noble Lord, Lord Sharkey, there are different definitions of businesses that can have different protections and routes of redress within a system of small business lending. The system that we have is aimed to be proportionate, focusing on the smallest SMEs which are at the most risk. On the difference between the voluntary measures that are in place and bringing it within the regulatory perimeter, we are not saying that those are entirely equivalent protections but that they are proportionate protections to the risks faced by those firms. I set out different thresholds in my answer in relation to both those businesses that are protected under the Consumer Credit Act, which are sole traders, loans under £25,000 and a few others there, and businesses that are able to access either the FOS or the Business Banking Resolution Service. There are other thresholds too. Therefore I appreciate the point that that is different from the definition of a SME that the noble Lord asked about. The system is designed to be proportionate to the size of the SME and the protections it affords to them as regards business lending.

[Baroness Altmann (Con)]

I thank my noble friend for giving way once again. This is an important area for the whole financial services framework that we have in this country. I think that the noble Baroness, Lady Bowles, the noble Lord, Lord Sharkey, and my noble friend Lord Holmes are all trying to press the Minister on the issue of protection before scandals happen so that our system can be trusted more. The point here is about deterring financial institutions from even trying to undertake these actions by having stronger regulatory protection upfront, rather than this or that right of redress after the event has happened.

[Baroness Penn (Con)]

I understand my noble friend’s point, and of course the Government also consider that when we look at what to bring into the regulatory perimeter or the right of redress, both as a route of redress and as a point of deterrence. The Government take all those factors into account when considering this question.

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[Lord Tunnicliffe (Lab)]

My Lords, I shall speak to both the amendments in this group. I was not going to speak on the amendment of the noble Baroness, Lady Noakes, because, frankly, I did not understand it as well as it was just explained. The key point she is making is that there is a whole series of things about credit. It is complex, and that allows the Government to go behind the screen of saying, “We need this review; we need more time to think about it”, and so on. The gripping words she used were that society needs this stuff up to date as quickly as is reasonably practicable. There is no area where that could be more true than buy now, pay later. We are in a period of enormous stress for poor people. They desperately need reasonably priced credit because they just do not have any reserves.

In this area, there is this wonderful illusion that the credit is free. People do not lend money for free, except, perhaps, foolish parents. Buy now, pay later depends, as far as I can see, on the borrower failing to obey the rules, and companies make their money out of the default situation. They also make some money out of what they charge to retailers, but it is a very uncomfortable area.

I recognise that buy now, pay later can be a lower-interest borrowing option for some consumers, and that it is an area where a lot of innovation takes place, but neither of these points means that it should not be properly regulated. The Government have again and again committed to bring in regulation. Indeed, we are talking about 18 months since we got the first assurances from the Government that this would be subject to proper regulation. The Government have not acted, and harm is happening all the time. For example, Citizens Advice research has found that nearly two in five buy now, pay later customers do not fully comprehend the nature of the loan they are signing up to and often vulnerable shoppers are signing up to financial products that they do not fully get. What are the Government doing and which buy now, pay later companies are they meeting to ensure greater transparency?

We need to act in this area. I cannot understand how the Government can expect the assurances they give on these sorts of legislation to be taken seriously in future with the delays that have appeared in this area.

[Baroness Altmann (Con)]

My Lords, I support both amendments in this group. I think my noble friend Lady Noakes’ Amendment 43, which she so eloquently explained, is very much needed within our financial services system. I agree that it is possible that we should consider introducing into the wording greater parliamentary scrutiny rather than the discretion that may otherwise be given wholly to the Treasury, but I think the explanation by the noble Lord, Lord Tunnicliffe, of the situation with buy now, pay later is a good example of the kind of amendment that my noble friend wants to put in which would have facilitated some faster action had it been put in. I am not sure, but with the Bill we are going back time and again to the asymmetry of information and power between those transacting with financial services in general and the financial services industry that is putting products out to those customers. I think these amendments would be very useful additions, and I look forward to hearing from my noble friend.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to express support for Amendment 212 and to make a couple of points about it. I noticed that a couple of days ago the New York Times reported that buy now, pay later is an industry facing “an existential crisis”. I also note that various market analysists are reporting that this is a huge area of growth for the UK economy and the UK financial sector. Putting those two things together is a cause for concern not just for individual consumers, as the noble Lord, Lord Tunnicliffe, set out so clearly, but for the structural impact on the UK economy.

A survey was done for a household debt report by a company called NerdWallet. I cannot attest to the value of the survey, but it confirms what I have observed: 20% of women and 11% of men have used buy now, pay later in what amount to loans. So there is a gender aspect to the use of buy now, pay later. We look at many other areas of our system where women are financially disadvantaged but there is real cause of concern here.

My final point concerns something that really puzzles me—I understand that we may not be able to get an answer on it now. It was reported recently that a company called Zilch, which has 3 million buy now, pay later customers, is planning to report to all the major credit agencies the amount of debt that is being held by its customers. I think customers’ understanding is that it does not show up on their credit records—this is usually a soft search—so they are able to keep borrowing money through this mechanism and it does not show up. I do not quite understand how, if something was taken out on that basis, it can suddenly become declarable to credit rating agencies. This is an area where it is clear that regulation is necessary.

Financial Services and Markets Bill

Baroness Altmann Excerpts

Committee stage
Wednesday 25th January 2023 Grand Committee

The ultimate point here is that in the Bill there is a plethora of regulations that we will be asked to agree to in order to give Ministers essentially executive power and, at the end of the day, all we as a Chamber can do is raise questions but accept that the Government will always get their way. In that sense, the noble Lord, Lord Sharkey, has done us a great service in opening our debates on such an important issue.

[Baroness Altmann (Con)]

My Lords, I too congratulate the noble Lord, Lord Sharkey, on his amendment. I agree with his explanation of why parliamentary scrutiny is so important and his interesting explanation of the choice of words he has used in his amendment. I accept that later on, as my noble friend Lady Noakes said, we will debate parliamentary scrutiny once again, but in my view it is absolutely vital that we in this House recognise the dangers coming at us from various legislation that is taking away Parliament’s future ability to oversee and scrutinise important legislation.

I also understand what my noble friend Lord Trenchard said about the importance of allowing competition. However, we must not lose sight of the fact that what is sometimes called regulation may of course be inconvenient for the financial services providers and hamper the ability for innovation and free-for-alls to try different things, but it is also relevant to think of regulation as consumer protection. These are rules that will stop financial services companies taking advantage of consumers.

Asymmetry of information in financial matters is obviously something we are all too aware of, but just doing away with regulation, rushing to get rid of all the EU regulations without proper scrutiny and saying that the Financial Conduct Authority must work to a deadline, otherwise it will drag its heels, misses the point. If there is a forced deadline that precludes scrutiny and consideration of what these regulatory changes will mean for the general public or even more informed investors, without considering those risks, one has to ask whether it is resourced enough to do that. If not, which most of us would probably suggest is the case, what other elements of its duties will not be attended to while it is rushing to perform this job to an artificial deadline? It is a massive task—I respect that.

We need to take seriously the thrust of the remarks by the noble Lord, Lord Sharkey. I also look forward to hearing my noble friend’s remarks about the Government’s own amendments.

[Lord Naseby (Con)]

My Lords, I was one of the 34 who took part in the debate on secondary legislation, and I previously had the privilege of being on the Public Accounts Committee for some 12 years.

The debate on those two reports was an absolute watershed. Here is a golden opportunity to ensure that this Bill, which is so fundamental to the growth of our country, particularly the City of London, at a particular time can be pioneering. I am sorry to load that on to my noble friend; at any other time it might not be loaded on to her.

The key elements are there: secondary legislation basically means that those of us here in Parliament, in both Houses, have an opportunity to debate any changes made to a Bill. If I had to take issue with the noble Lord, Lord Sharkey, it is that he has in his amendment, at proposed new paragraph (b), the word “significant”. One company’s “significant” might be insignificant to another, and vice versa, so I do not think that is quite the right word to use.

We will go through this Bill in detail. Others have made their points, but for me—I did previous work with two quoted companies and a friendly society in the role of chairman—this is an opportunity. We must recognise that growth for our country is fundamental. That fundamentality is, to a fair degree, influenced by the Bill before us.

UK Green Taxonomy

Baroness Altmann Excerpts

Thursday 3rd November 2022 Lords Chamber

[Baroness Penn (Con)]

The noble Lord is absolutely right that, to be most useful, having international agreement on a taxonomy is essential. The Government have supported the development of international standards in this area: for example, we have worked with the International Sustainability Standards Board to ensure that there is international alignment on the work in these areas.

[Baroness Altmann (Con)]

My Lords, I also welcome my noble friend back to the Front Bench. I echo the calls for us to urgently release the information on the green taxonomy. Could my noble friend please confirm that the Government remain committed to a green taxonomy that is science-led? Could she also confirm the position regarding natural gas as a transition fuel, given concerns about the security of the energy supply in the short term?

[Baroness Penn (Con)]

I assure my noble friend that we will be led by science in this area. Earlier in this Question, noble Lords referred to the work of the Green Technical Advisory Group, which was set up to advise the Government on the UK green taxonomy and is informing our work in this area. There is a question about the inclusion of both gas and nuclear in the green taxonomy. The Government have not made any decisions on their inclusion, but they will engage with experts and the market before making any final decision in this area.

Budget Statement

Baroness Altmann Excerpts

Tuesday 14th March 2017 Lords Chamber

[Baroness Altmann (Con)]

My Lords, what kind of economy do we in the United Kingdom intend to foster? Do we want policies that will encourage growth, investment, risk-taking, entrepreneurship, hard work, family values and responsible rather than reckless spending? That is certainly what I believe are core Conservative principles, and I wholeheartedly endorse them. In addition, the Prime Minister has talked of fairness and helping those who are “just about managing”, and I absolutely echo those sentiments too. However, this Budget contains some measures that, in the overall context of our long-term economic interests, seem to send confusing messages about those core principles.

I start by welcoming the Chancellor’s reaffirmed commitment to fiscal responsibility. Yes, tax revenues have been stronger than expected in the past year, but just using that windfall to boost current spending would not be sensible. Huge budget deficits and ultra-loose monetary policy are not sustainable over the medium term. I urge my noble friend to encourage the Treasury to take more seriously the opportunity to harness the power of pension funds and long-term insurance assets to stimulate growth directly and invest in infrastructure and housing.

As we negotiate an exit from the EU, we cannot assume that the economy will keep surprising on the upside. Lower immigration is a risk to our growth prospects. The Minister mentioned the importance therefore of investing in people. The new T-levels are welcome, but that needs to apply to older people too, so I warmly welcome the Chancellor’s decision to spend £5 million on returnships. Such initiatives could certainly provide much-needed help for older adults to help them extend their working lives. Pilot schemes helping people to return to work could particularly benefit older women wanting to work again after taking time out for caring. Leaving the EU means that it is increasingly important to help Britons keep working if they want or need to, taking advantage of our home-grown skills and talents to boost economic growth. Each extra one year later that the average British person delays retirement is estimated to add 1% to GDP. The economic benefits of fuller working lives need to be much better appreciated.

Another welcome measure that could help some older people is the Chancellor’s £2 billion boost to help councils fund social care. However, this is just a sticking plaster. Demand for care and costs of delivery have risen sharply, and cash-strapped councils are leaving too many frail elderly people without the care they need. This is already creating havoc in the NHS and the crisis has hit while the current cohort of older people is relatively small, before the baby-boomer generation reaches more advanced old age. If our economy is to support a health system that can cope with rising numbers of elderly people, reduced immigration and smaller cohorts of working people, clearly much more needs to be done on social care.

It is astonishing that, with a rapidly ageing population, there is absolutely no money set aside, either in the public accounts or at the private sector level, specifically to cover care costs. Previous politicians have just kicked this issue into the long grass. I welcome the Chancellor’s Green Paper later this year, but it must lead to action. Will my noble friend the Minister recognise the urgency here? The Budget was another missed opportunity to kick-start the extensive reform programme that is so urgently needed, including proper integration of health and care, helping families to prepare for care costs, new tax-favoured saving products, incentivising employers to help individuals fund care—perhaps elderly care vouchers, similar to the principle of childcare vouchers—and even auto-enrolment into care saving plans.

That brings me to my next point. The Chancellor specifically ruled out the so-called death tax to fund social care, so money will not be recouped retrospectively from people’s homes or estates to pay for care, but at the same time the Government will introduce precisely such a death tax. However, this one is what we might call a stealth death tax. It comes in the form of the massive rise in probate fees. Some 97% of the respondents to the Government’s own consultation were firmly against this. The Ministry of Justice seems to have landed the Chancellor with a little bit of a problem here. I suspect that, having admitted that this money is actually supposed to be there to fund other parts of the court system, because the current probate fees fund the cost of delivering the probate registry, many families might prefer to have a death tax to pay for social care rather than to help the Ministry of Justice.

The most surprising news in the Budget was of course the hit to the self-employed. These are the very people who will keep our economy going and growing. They have no maternity pay, holiday pay or sick pay and nobody else to fund a pension for them. I must admit that I fail to understand the urgency of introducing a rise to class 4 national insurance rates. The manifesto commitment not to raise national insurance was clear and we knew at that time about the rises in self-employed people’s state pensions. I was not surprised, when I took the tax-lock legislation through this House, that it related only to class 1 national insurance because we were reforming class 2 and we knew there would be reform of class 4. I would not have expected an increase in rates at this time, hitting the self-employed directly. The Chancellor talked about the need to create the growth that will underpin our future prosperity and his ambition for the UK to be the best place in the world to start and grow a business. I do not quite understand how this is ensuring that those with the broadest shoulders bear the heaviest burden. This measure fails that test.

Indeed, the cut to the dividend tax allowance is another tax on risk-taking and equity capital. It will hit not only small investors but those people who are trying to start a business and want to take a dividend out of that company. Our dividend taxation and the tax on risk-taking is out of line with the tax on debt instruments, yet economic growth can usually benefit more from equity risk-taking than debt finance. People who set up their own businesses are being hit twice in this Budget. I do not believe that is sensible for the future growth of our economy, and I hope the Chancellor will rethink these plans.

Savings (Government Contributions) Bill

Baroness Altmann Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Thursday 12th January 2017 Lords Chamber

[Baroness Altmann (Con)]

My Lords, this important debate has significant implications for younger generations. First, I congratulate the Government on the tremendous improvements they have made in recent years to the UK pensions landscape. As defined benefit schemes are on the brink of extinction in the private sector, I am delighted that the Government have made improvements that ensure defined contribution pension saving is now more user-friendly than it has ever been. Of course, if people have the opportunity of a good defined benefit pension, underwritten by their employer, that is hard to beat. However, some people with very small deferred entitlements in a final salary-type scheme may well be better off transferring their pension into a modern defined contribution scheme. We could not have said this a couple of years ago, but it can now be a sensible strategy for part of people’s past pension accruals.

Of course, defined benefit guaranteed pension income will not normally meet the costs of social care that many citizens will face. There is virtually no pre-funding of social care, either at public or private sector levels. Families are suddenly finding that a pension income is not all they need for a decent retirement. If you need looking after and have enough income or assets to be above the draconian care means test, you have to fund all your care costs yourself. That is why having some money saved up in case you need care is sensible advice for most families, especially baby boomers in our ageing population. But they do not know this. Most think the NHS will look after them from cradle to grave, as Beveridge’s national insurance scheme was often believed to achieve.

I am proud that this Government have acted to reform defined contribution pensions so that they can provide much better and more appropriate support for millions of people in later life. Some people will be able to use them to help to pay for social care, once the new pension freedom system is better understood, and perhaps with a little extra nudge from the Government. That would be a worthwhile focus of new saving incentives.

To be frank, I do not think the public or even the Government themselves, including my noble friend the Minister, have yet realised how positive the defined contribution pension changes are, how much better the landscape now is and how much more suitable for 21st-century realities. This is evidenced by last week’s astonishing infographic purporting to educate the public about retirement saving, which does not even mention the word “pension”, only lifetime ISAs, other ISAs and premium bonds. It is vital that the Government urgently revise this public guidance and recognise the important difference between short-term saving and long-term investment. Young people saving for retirement require the latter and also need extra money for care. Defined contribution pensions can offer more than just a guaranteed income. Of course, a pension is typically thought of as a lifelong income in old age but that is not necessarily enough to look after today’s or tomorrow’s elderly people.

With the new pension freedoms that ensure all pension savers should have flexibility and choice to use their pension savings as best suits themselves, the Government have already achieved the kind of flexibility that the Minister was talking about for younger people. Rather than effectively requiring most defined contribution pension savers to buy an annuity, pensions can better fit in with people’s changing lives.

The new regime does not stop anyone buying annuities if that is the right product for their circumstances, but they do not now have to do so and especially not when they are still relatively young. Most people reach their defined contribution scheme age and are still working. They will be best served by being in a pension and keeping it intact to grow, paying in more each year, so that they will have more money to support them after they finish working. That is also an important potential purpose of pension saving—to provide as much private resource as possible to support individuals during their retirement years.

There are also new behavioural nudges for people so that they do not have to worry about leaving money in their pensions for as long as possible. Under the old regime, with a 55% death tax, people would not want to die with money in their DC pension, because more than half would be lost in tax. Now, they can just leave the money there into their 80s and 90s. As I have said, if they need to pay for social care, they may have money in their pension fund. If they are lucky enough not to need care, the money passes on tax free to the next generation.

Pensions are now a product that we can be proud of and that can help people in different ways with the retirement costs they may face, rather than focusing only on ongoing income. We should be building on this success, not putting it at risk with the measures in this Bill. Of course, most people may not yet have enough money saved up, but as we look to the future and as the baby boomer generations reach later life, many of them will have—or could have—money that they could keep, rather than spending it too soon as will be encouraged by the lifetime ISA.

The combination of reforms we have seen since 2010 fits well with the theories of behavioural economics too. Behavioural science has proven powerful in driving much wider coverage of pensions across the workforce. The policy of auto-enrolment is just starting, bringing in millions more people to pension-saving, often for the first time, supplemented by a good employer contribution. The theory of inertia is ensuring that opt-out rates are far lower than anyone predicted, especially, as the noble Baroness, Lady Drake, said, among the young. The vast majority of those who are automatically enrolled into a pension are staying there. The young are clearly willing to stay in pensions, and this is a massive success so far. So it is simply not correct for Ministers to assert, as in the past, that people do not like pensions. That is yesterday’s story and is also partly a function of the fact that many do not yet understand just how good pensions are these days.

We are on the cusp of a major success in extending pension coverage for millions of people, but the measures of this savings Bill put us in danger of snatching defeat from the jaws of victory. Auto-enrolment is only just beginning, and has been a great success so far. Once again, the noble Baroness, Lady Drake, through her work with the Pensions Commission, can be rightly proud of sowing the seeds of this success. But it is work in progress—auto-enrolment will not reach all relevant workers and the full minimum contributions until 2019. Even at that stage, contributions will still be too low for most people, and millions, especially lower-paid women and the self-employed, will be left out altogether. More needs to be done, but the programme is working, and I and other former Ministers have had to battle to keep auto-enrolment in place. I congratulate the Government on doing this, but I truly fear the lifetime ISA in the Bill could derail the project before it is properly up and running.

As the state pension is being cut—the new state pension will mean lower pensions in the long run for most younger people in this country—it is vital that we ensure more people have more private income to add to their basic level of state support. That is why it is so important to continue to incentivise saving for retirement and help people build up as much money as they can to see them through their ever-lengthening later life. Using pensions could best achieve that. Distracting them with a lifetime ISA risks it.

Pensions have the right behavioural nudges. Individuals are automatically enrolled, to take advantage of initial inertia, and they receive extra from their employer to add to their own contributions, and hopefully even more money in tax relief from the Government. So the individual who puts £1,000 of their own money into a workplace pension scheme where the employer matches their contributions could receive a further £1,000 from their employer and an extra £250 in basic-rate tax relief—or even more if they are on higher-rate tax—and possibly even more from salary sacrifice. This means their own £1,000 can be more than doubled on day one.

When they reach later life, the money they have saved up will be waiting for them. They can take a quarter tax free and can leave the rest invested. Any money withdrawn will be taxed as income in that year, so there is a built-in tax brake on taking the money out quickly. The pension tax structure deters early unnecessary spending. Future Governments should therefore have fewer poorer pensioners to support. Is that not what we incentivise retirement saving for? It is also important to mention that the new state pension does not just lift all pensioners above means testing; it only lifts them above pension credit. But if all they have is a new state pension, a future Government, and younger taxpayers, could still have to provide housing benefit, council tax benefit and other means-tested help. So those who have no other private resources will potentially fall back on the state.

That is why I am so concerned about the introduction of this so-called lifetime ISA and why I beg your Lordships’ indulgence for my long speech today. This is the only opportunity to put on record the strength of feeling on this matter. We do not have an opportunity to amend the Bill, but it is important to make these points. It is a dangerous distraction that could undermine pensions and increase future poverty. There are many concerns and all I can do is put on record what the problems are and hope that the Government will take notice before it is too late. This is a money Bill, so I cannot change it, but I believe that it needs radical rethinking.

If used for house purchase, this lifetime ISA is okay—but we already had a help-to-buy ISA, so why did we need something new to complicate the ISA landscape further? However, when masquerading as a pension, this product is dangerous. It is also a complex product and should not be sold carelessly—although I fear there will be inadequate suitability checks. “Lifetime” ISAs will not last a lifetime, even though the purpose of giving a taxpayer bonus is supposed to be to ensure that people can support themselves privately in their old age. Today’s taxpayers are subsidising the under-40s to build up a fund that is likely to be spent at around age 60. This new product has the wrong behavioural structure and I am warning now that it risks becoming a new mis-selling scandal in coming years.

I cannot see who will be better off in their old age saving in a lifetime ISA than if they had put the same money into a pension instead. But people will be confused. Young people I have spoken to—some of whom are on higher-rate tax and have access to a generous workplace pension—have already been attracted to the idea of using a lifetime ISA instead of a pension. Only when I explain that they will lose their employer’s contribution and higher-rate tax relief do they realise this could be a mistake. How many people will be misled and may come back in future years and complain about being mis-sold this product? I have spoken to 30-somethings who clearly misunderstand. Here are some further examples.

Workers on basic-rate tax mistakenly believe that the 25% Government bonus is better than 20% tax relief. Of course, they are exactly the same. A 20% grossing up is equivalent to a 25% extra bonus, but who will explain that to customers? I urge the pensions industry to do more to help people to see the extra money from government, or other taxpayers, which is paid into their pension.

Some people have been attracted to the idea that they can get their money back if they need to, whereas pensions are locked until age 55. What they do not understand is that the Government take a heavy “withdrawal charge” from their fund if they want to spend it before 55. Unless they are buying their first home or are terminally ill, they face this so-called 25% penalty. But people think that that is merely taking back the 25% bonus. Once again, who will explain that it is far worse than that? They will lose far more than the government bonus and, indeed, some of their original amount. If they put in £1,000 and saw no investment growth at all, it would be worth just £937.50—which is another big danger of using the lifetime ISA for saving for retirement.

The dual purpose of this lifetime ISA will confuse people. Just when we have the opportunity to capitalise on the success of pension reform—auto-enrolment, pension freedoms—and the Pension Wise service, which offers real value to people and can help them save money until their 80s and 90s, along comes a new product that adds complexity and is unlikely to last so long.

Using a lifetime ISA instead of a pension will mean less money being put in on day one, less money growing, especially as much of it will be in cash—we know that that is what ISAs are predominantly used for—and more money spent more quickly in later life. Indeed, this lifetime ISA seems such a waste of taxpayers’ money. It will be good for those who have already filled their pension pot or their annual allowance, but it will not be good for those younger people saving for retirement. LISA contributions must stop at age 50. Fifty is only the start of the second half of one’s adult life, when pension savings could be stepped up, rather than suddenly stopping. I know that the FCA will try to impose regulatory requirements to protect customers, but with the best will in the world, reams of new disclosure documents are hardly going to help in practical terms. I believe that the LISA product introduced by this Bill is a—perhaps inadvertent—mistake. I have studied, managed and advised on pensions and pensions policy for nearly 40 years, and I share with noble Lords today my fears that this Bill risks worse retirement outcomes for generations to come.