Corporate Insolvency and Governance Bill

Debate between Baroness Altmann and Lord Bates

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Baroness Altmann [V]]

My Lords, I too will be brief in the interests of time. I echo the wise words of the noble Baroness, Lady Anelay, and I support her Amendment 143, but I particularly want to talk to my own Amendment 144. This amendment deals with an issue whereby the Bill has rightly removed barriers for those companies whose articles do not allow virtual AGMs to be held. It is clearly important to enable such meetings in the current environment, but Schedule 14 has some worrying implications for shareholder capitalism. I ask my noble friend the Minister to consider Amendment 144, and I thank the noble Baroness, Lady Bowles, for her support. The amendment would make a small change in respect of paragraph (b) of Schedule 14 (3)(6), which removes the right of shareholders to ask questions at AGMs and permits them only to vote.

That paragraph would clearly reduce shareholders’ ability to scrutinise, engage with and hold to account a company's management. As ShareAction has pointed out, it would also damage the UK’s reputation for protecting shareholder rights and the interests of both institutional and individual shareholders. My amendment would simply omit paragraph (b), so that ways can be found to allow shareholders to engage in dialogue and question their boards, as is already the case for US and European companies. I would also hope that, after these emergency measures expire, my noble friend might agree that there is a need to develop ways to modernise British AGMs to better reflect the era of modern stakeholder capitalism.

[The Deputy Chairman of Committees]

I now call the noble Earl, Lord Clancarty. No? I call the noble Lord, Lord Cormack.

Prudential Regulation Authority: Equity Release Sector

Debate between Baroness Altmann and Lord Bates

Wednesday 5th September 2018 Lords Chamber

[Lord Bates]

That is of course why within the industry itself—and indeed with the regulator—the normal level at which borrowing is taken from the home is between 30% and 40%, to allow for that cushion. We have to recognise also that this has two benefits: to individuals as, for most people, their home is their largest asset and being able to release some capital to enhance their quality of life in later life is good; and to the annuity holders on the other side of the balance sheet from the equity release, who have been suffering badly as a result of gilt yields being around 1.5%. The ability of life insurance companies to match these two needs and to offer a better deal to both is something to welcome. The noble Lord is absolutely spot on when he says that we need to watch it; we need to watch it very carefully and what I have outlined is what the regulator is doing already and the rules that it has applied, and also the consultation that is open at this moment to see whether more needs to be done.

[Baroness Altmann (Con)]

My Lords, I support wholeheartedly what my noble friend has said about the importance of the equity release market for certain families. Does he also agree with me that, as the Equity Release Council figures show, most equity release loans are only about 30% of loan to value—some may be around 50%? Even if house prices were to decline by 30% or more, the problems in the conventional mortgage market would be far greater than those in the equity release market. I was rather surprised to see such scary headlines on this particular segment of the market.

[Lord Bates]

My noble friend has great expertise in this area, which she brings to our consideration. Of course, the amount of capital at risk in the non-asset linked security on balance sheets amounts to some 3% of the total. It is, therefore, a relatively small amount but it is growing fast. We want to make sure that two things happen: first, that balance sheets correctly reflect the risks that are inherent in them and, secondly, that consumers get independent advice, take the right decisions and are aware of the risks that they face. Both are responsibilities that have to be shared between the PRA and the Financial Conduct Authority. We are watching this very carefully; we are not complacent and we want to make sure that that happens.