Banks: Bridging Finance

Debate between Lord Desai and Lord Newby

Monday 20th October 2014 Lords Chamber

[Lord Newby]

I certainly look forward to reading the report. I will be fascinated to see how that right might be translated into reality for a lot of people, but some local authorities are beginning to look imaginatively about how you help people to move. Very often, one of the big problems is just the physical challenges of sorting out the move, switching the bills and so on. Redbridge, for example, and a number of other authorities have started to provide a service to people who wish to downsize, to help them with all those mechanical arrangements which, for some people, prove to be the last straw in stopping them from downsizing.

[Lord Desai (Lab)]

My Lords, does the Minister recall that during the crisis when we changed from rates and the support grant to the community charge, there was a myth that there were many asset-rich but cash-poor people? It proved not to be true. We are again hearing this myth of asset-rich but cash-poor people, but if they are asset-rich, they should not need a mortgage, as they have enough equity in their present house to relocate.

[Lord Newby]

My Lords, that is obviously the case for many people who have been in the same house for a long time. Some people entering retirement who still have a mortgage may require a mortgage if they are moving to a smaller property, but it is almost by definition going to be a smaller mortgage than the one they previously took out, given that there will have been some capital appreciation. One of the key challenges for us is that research shows that almost half of all over-55 households have spare space in the house. If we can facilitate downsizing where people genuinely want to do it, society as the whole will benefit.

Financial Services Bill

Debate between Lord Desai and Lord Newby

Monday 8th October 2012 Lords Chamber

[Lord Newby]

My Lords, I can deal with the first part of that intervention more quickly and easily than the second. The first “must” in subsection (2) is there because it is an EU legal requirement. If we are asked to do something, we have to do it; we do not have the option of not doing it. There is a good reason for a “must” there.

With regard to the noble Lord’s second point, I was speculating about the Romanian or Hungarian or Finnish languages as he was speaking and wondering whether there was the same absolute distinction between “may” and “must” in every case. I am not an expert in every bit of regulation in every member state. I realise that this is a major deficiency but I do not think that it pertains very strongly to the amendments before us today. For the second time, the noble Lord has raised a potential other amendment that is not on the Marshalled List. If he will excuse me, I will go back to concentrating on the ones that are.

[Lord Desai]

Perhaps I may say one word in favour of my noble friend’s amendment. It strikes me that there may be what we call a multicultural problem here, that in an investment situation relatives are defined much more broadly in certain communities than others. The noble Lord may be right that “may” will do and “must” will not do, but I have been asked to be non-executive director of some Indian companies and the number of relations they ask me to certify who do not hold assets in that company runs to something like 30. I hope that the regulators are aware that “must” may be a better word than “may”, but I concede the point, as long as the noble Lord assures me that the regulators are aware of the multicultural problem.

[Lord Newby]

I am sure that the regulators are aware of the multicultural problem, but the example given by the noble Lord absolutely exemplifies the problem. If one had a single-trader IFA who came from a particular culture and had a very large extended family, it would be at a disproportionate cost that the regulator looked at every single relationship that he or she had, which could run to many hundreds.

[Lord Desai]

Until it goes wrong.

[Lord Newby]

That is why the regulator has to look at relevant and appropriate relationships rather than everybody who could be conceivably considered to have a relationship with that regulated entity or individual.

Amendment 152 was also put forward by the noble Lord, Lord McFall. I hope that I can persuade the Committee that, again, this is unnecessary. It is important that those to whom permission is granted are not subject to influences that may act in a way which is not in the best interests of potential clients. That is why new Section 55R(1) is in the Bill. The current text in new Section 55R(1) refers to “relationship”. It deliberately does not specify the nature or type of the relationship, so that out of all conceivable relationships—including family, business, and other associations—the regulators can exercise their judgment on which relationships should be investigated and which should be factored in to the instances of decision-making set out in new Section 55R(1). This reiterates the point that I have just been making to the noble Lord, Lord Desai, that a degree of judgment needs to be exercised by the regulator over which relationships are taken into account.

However, I assure the noble Lord, Lord McFall, that the specific types of relationships to which his amendments refer will be among those considered by the regulator and will be looked at where appropriate. Therefore, I hope that the noble Lord will be satisfied that the amendments are unnecessary.