Tenant Fees Bill

Debate between Lord Deben and Lord Best

Monday 5th November 2018 Grand Committee

[Lord Deben]

I wonder if I can help the noble Lord. I know he always worries when I get up and say that I am going to be helpful, but on this occasion I might be. I remind the Committee that I am chairman of the organisation that represents independent financial advisers and those who deal with wealth management. Therefore, I understand a lot about the parallel circumstances referred to by the noble Baroness, Lady Hayter, when she pointed out the protection accorded to bank accounts and the different sorts of protection in the financial services industry. What I really want to say is that I hope my noble friend will think very carefully about this because we have seen the huge difficulty that people now have—even the most excellent of firms—in getting proper protection from the insurance industry.

The noble Baroness made an important point about being proportionate as to what the real risks are. I want to make a point about the dangers of not being proportionate. This is an industry of great importance and I am absolutely excited by the Bill because it does a whole lot of things that need to be done. However, we have to be very careful about importing into it those things that will result in unexpected and unwanted additional results.

I am not sure that civil servants are always as expert in these detailed aspects of insurance as those who deal with them daily. All the advice is that there really is no need to protect any more than the kind of protection that ARLA and RICS already provide. You do not really need that advice: the fact is that they have run the system very effectively up to now. I remind my noble friend that the party he represents is always very much in favour of free enterprise and people getting together to organise things on their own. Would it therefore not be a good idea for us to be very careful about not taking that advice?

We know that the 40% that do not belong to these organisations are, by nature, either not very careful or painfully close to the edge of the law. There is a real range. But I remind the Committee of the last speaker, who rightly said that we do not want to enfranchise the 40% by disfranchising the 60%. That does not seem a sensible answer. I hope my noble friend will take the advice of those who have had to deal with these things in other areas: that it is extremely dangerous if you get yourself into a position in which you lay too heavy a weight of insurance when it is not necessary. I have a long history of defending the consumer, but I do not see how consumers are better protected by excluding from the market the two organisations that have so far dominated it—if that is the right word.

The last thing I want to say is this: I have often spent time trying to encourage ARLA to become a more professional body. One of the successes of recent years has been precisely that, and we ought to be encouraged by what ARLA has done. It would therefore be a great pity if, on this occasion, we ignored its experience, which has come about through its own change from its history to today, or indeed the 150 years’ experience of RICS.

[Lord Best]

I want to offer my support to the noble Baroness, Lady Hayter, who has done so well in getting us to this point with CMP. It is so disappointing for those of us who have supported her efforts to hear of this last-minute significant hitch. The reason that a number of us were very supportive of CMP being introduced was not because of the 60% but because of the 40%. It was not just to make sure that the 40% had some insurance so that landlords’ and tenants’ money was properly protected. It was rather more sinister than that: it was to drive out that part of the 40% that just would not be able to get insurance, because when their accounts were viewed by those providing insurance, they would be told, “I’m sorry, we’re not insuring you”. This was, and I hope still will be, a way of weeding out the fly-by-night agents who set up shop and who we do not need in this business.