Pension Schemes Bill [HL]

Debate between Lord Young of Cookham and Baroness Drake

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

[Lord Young of Cookham (Con) [V]]

My Lords, Amendment 53 in my name presses the Government to clarify progress on identity verification. This is crucial because without a system for identity verification—proving you are who you say you are—no one can use a dashboard. The original proposal for verification was summarised on the ABI website:

“The process to confirm the identity of users is based on the gov.uk/verify system”.


Verify was a government-sponsored IT project that began in 2014 and has cost about £200 million. It should have provided the basis for accessing pensions dashboards. To put it mildly, however, it has not lived up to expectations, leaving a void in the dashboard programme.

Last year the NAO published a critical report on what in its words was

“intended to be a flagship digital programme”.

It said:

“Even in the context of GDS’s”—


the Government Digital Service’s—

“redefined objectives for the programme, it is difficult to conclude that successive decisions to continue with Verify have been sufficiently justified.”

A year earlier, the Infrastructure and Projects Authority recommended that Verify be closed as quickly as practicable. The Institute for Government’s Whitehall Monitor commented that the scheme continued to be “mired in issues”, had fallen “short of targets”, and had

“failed to build its intended user base and … is not delivering the efficiencies that the government sought.”

In March this year the Government stopped funding the scheme. Verify’s falling out of favour was heralded by my noble friend in his reply to my amendment in Committee. This is what he said:

“I understood what my noble friend said about Verify, and I assure him that the industry delivery group has this issue squarely on its radar.”


Putting on his black cap, he went on to say:

“The solution may not be Verify. … We hope to make announcements on that in due course.”—[Official Report, 2/3/20; col. GC 205.]


Responsibility for taking identification verification forward now rests with MaPS, the Money and Pensions Service. In its progress report in April on identity verification, there is no mention of Verify, which seems to have been airbrushed out.

Yesterday, I got an email from Mr McKenna of MaPS, for which I am grateful. I had asked him whether the current market engagement exercise on the dashboard included verification, and this is the reply:

“The current market engagement exercise does not include identity verification. This is a separate work strand within the programme that requires more work before we will be in a position to engage with the supplier market.”


So a prerequisite for the dashboard programme has been put to the back of the queue. Who is going to provide the identity verification service? Given the commitments that we have heard this evening that the service will be free, how on earth will it be funded? Will it be by MaPS, for example? Is my noble friend able to make the announcement that he trailed in his earlier reply to me, on the timing and funding of this crucial element in the programme?

Amendment 65, in my name, places an obligation on MaPS to provide a dashboard by replacing “may” with “must”. It is the identical twin of an amendment that I tabled in Committee, and I am grateful to my noble friend Lady Altmann and the noble Lord, Lord Sharkey, for their support. To the amateur, our one-word change seems a more economical way of achieving the desired objective than the five government amendments with thousands of words, but we bow before the expertise of professional drafters. I say straight away how grateful I am, as I am sure other noble Lords are, that the Government have listened to the strong case made on all sides in Committee, and recognised that we need the certainty of compulsion, rather than the uncertainty of discretion, when it comes to MaPS and the dashboard. That we have this concession is typical of the patient listening of Ministers and their officials in the last three months, on this and other issues, and I warmly welcome it.

But—and it is an important “but”—there is no date by which they have to do this. Without some idea of timescale, we could be left holding the menu without ever getting the dish—hence my Amendment 68, which obliges MaPS to complete this task by December 2022. I referred in Committee to the length of time it has already taken to get this project up and running. It was first promised by Government in 2002 as an online retirement planner, and we were told 12 years later by the then Financial Secretary to the Treasury that:

“A ‘RetirementSaverService’ (dashboard) will be essential to support pension freedoms.”


Five years after pension freedoms, there is still no dashboard, while eight national dashboards have been launched in Europe and we have been reassured by the ABI that there has been extensive testing of prototypes.

In response to my amendment in Committee, my noble friend Lord Howe said,

“but I can tell my noble friend that MaPS and the industry delivery group intend to set out their approach for the year ahead by Easter. By then, we should have at least the outline of a plan, with milestones I hope, so that we can be a little clearer on the answer to the question that he raised.”—[Official Report, 28/2/20; col. GC 184.]

Easter has come and gone, but no milestones. The latest from MaPS is:

“We plan to lay out a more detailed timeline by the end of the year.”


I looked at the ABI website over the weekend to see if it had updated it on the subject of the dashboard since Committee, and I found this under “FAQ”:

“If the prototype has worked, why do I have to wait until 2019 to use this myself?”


Perhaps that could be updated before Third Reading.

Since Committee, MaPS and the ABI have had to cope with the pandemic, and their top priority has to be the continued payment of pensions, the collection and investment of contributions, and the provision of advice. But the introduction of “must” instead of “may” risks being meaningless without some indication of a date by when the obligation must be discharged. I hope that my noble friend can provide some sort of road map and destination time by which we will do this.

Finally, Amendment 63, in the name of the noble Baroness, Lady Sherlock, would require the MaPS dashboard to be up and running for a year before other dashboards. My initial view was that we did not need to have more than one dashboard as the data displayed on each would be identical, so why duplicate? However, as a Conservative, I was persuaded to support competition and choice, but I have a lot of sympathy with this amendment; I believe it would be best if MaPS became the brand leader of dashboards and was well established as such in the minds of the public. It has a better chance of doing this if it is first out of the traps, rather like the BBC and commercial broadcasters. In practice, this should be the case as MaPS is in charge of the plumbing for all the dashboards.

Looking at the progress update report from MaPS in April, I see that Chris Curry of MaPS is in charge of the pension dashboards programme. His remit will be to develop the secure digital architecture to support and enable the development of pension dashboards. Therefore, MaPS is doing the specification, procurement and testing of the common systems that everyone will be using; with this inside track, it ought to be first in the field.

The Minister said in reply to the debate on this in Committee:

“It could be that the publicly funded dashboard will be launched first and be first in class, and that others will follow.”—[Official Report, 26/2/20; col. 185GC]


It would be helpful if the Minister could go a little further this evening and encourage MaPS to say publicly that it is indeed its intention to be up and running before anyone else. On this, as indeed with other amendments, I will listen very carefully to what my noble friend says in reply. I beg to move.

[Baroness Drake [V]]

My Lords, the introduction of a pension dashboard service raises major considerations of the public good and consumer interest, which is why I, my noble friend Lady Sherlock and many other noble Lords across the House have argued strongly for citizens to have the right to access their data through a public dashboard and not be restricted to commercial services.

I thank the Minister for his courteous consideration of our arguments and the decision of the Government to require the Money and Pensions Service—MaPS, a public body—to provide a pension dashboard service. Amendment 63 would ensure that the MaPS public dashboard must have been in operation for a year, and the Secretary of State must lay a report before Parliament on the operation of that service, before commercial dashboards are authorised by the FCA to enter the market. A MaPS dashboard would be part of their function to deliver guidance to the public that is free at the point of use—a safe space, unfettered by any commercial interests.

As the Government can mandate all pension providers and schemes to release personal financial data on the order of 22 or more million people, Parliament needs to be confident that the public good and consumer interest are well served. The points of the noble Lord, Lord Young of Cookham, are extremely valuable and important, and I thank him for making them. Financial technology should be harnessed for the public good and to improve financial markets, and the dashboard has that potential.

However, building a dashboard service has complexities and challenges. The architecture, the liability model, consumer redress on detriment, data standards and sharing risks, identity verification and security—that quite rightly preoccupied the noble Lord, Lord Young—delegated access and consumer behavioural responses, to name just a few, are all work in progress. As I observed in the previous debate:

“The long-term savings market is particularly vulnerable to consumer detriment”.—[Official Report, 26/2/20; col. 176GC]


There is a major governance challenge to be addressed: the consumer protection of millions in both the provision of the dashboard and the infrastructure that supports it.

The ABI, speaking for some commercial providers, has acknowledged the need for strong governance to make clear what obligations, liabilities and controls will be in place and are necessary. In requiring near-universal coverage, the dashboard service raises the bar on protecting customers from poor behaviour by regulated and unregulated providers, scammers and consumers’ own vulnerability, when all their savings can be viewed in one place.

Financial Guidance and Claims Bill [HL]

Debate between Lord Young of Cookham and Baroness Drake

Committee: 3rd sitting (Hansard): House of Lords
Monday 11th September 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, the co-pilot is back. I thank the noble Baroness, Lady Drake, for tabling this amendment, which would make it a criminal offence to falsely claim to be giving pensions guidance, money guidance or debt advice on behalf of the single financial guidance body. She set out very clearly the devastating impact that misleading or criminal advice can have on people’s lives. Both she and the noble Baroness, Lady Kramer, identified the ingenuity and adaptability employed by scammers and fraudsters to con people.

I was very interested in this amendment and made inquiries to see who would be caught by it. Clearly, people who claimed to give advice on behalf of the SFGB, or whatever it is called, would be caught but, as it stands, I understand that it would not cover someone pretending to give advice on behalf of a delivery partner. The noble Baroness may like to think about that.

Protecting people from financial fraud and scams is important, and I say to my noble friend Lady Altmann that the Government take it very seriously. Anyone who has served in another place will have seen at first hand the devastating impact that this can have on people’s lives. We will come on to cold calling when we reach Clauses 16 and 17.

Ensuring that people have confidence in the financial guidance and debt advice provided by, or on behalf of, the SFGB will be central to its success and to the success of other government policies to improve people’s financial well-being. This is a matter that we have explored in depth with the existing service providers—the MAS, TPAS and Pension Wise. As the noble Baroness said when she moved her amendment, of those three, only guidance provided under the Pension Wise banner is covered by a specific measure making it an offence to falsely claim to give such guidance. The MAS and TPAS rely on existing criminal offences.

In response to the speeches made, we have considered very carefully whether to go down the Pension Wise route and create a new, bespoke offence to cover all the single guidance body’s guidance and advice services. We have weighed up whether there is evidence to suggest that a bespoke offence would have any greater effect than existing criminal offences, taking into account that the Pension Wise offence has never been used in a prosecution.

There are already criminal offences that would cover imitation of the new body; again, the noble Baroness referred to these. For example, if an individual was misled by someone dishonestly claiming to give guidance or advice on behalf of the body with the intention of causing financial loss, this would amount to an offence. In England, Wales and Northern Ireland a person could be prosecuted under Sections 1 and 2 of the Fraud Act, and in Scotland such conduct would likely amount to the common-law offence of fraud.

In addition, under the Consumer Protection from Unfair Trading Regulations 2008, Regulation 9 makes it an offence to advertise or market a service in a manner that deceives or is likely to deceive the average member of the public. If that advertising or marketing causes or is likely to cause an average person to take a decision they would not have taken otherwise, again, this is an offence. This would make it a criminal act, for example, for scammers to use the logo of the new body.

Offences under the Fraud Act are subject to a maximum term of imprisonment of 10 years and offences under the Consumer Protection from Unfair Trading Regulations carry a maximum term of imprisonment of two years. As a deterrent, both maximum terms are significantly greater than the maximum 12 months envisaged by the amendment.

For these reasons, and having listened to the arguments, our assessment is that there are already existing offences which will provide for the single financial guidance body to take action against people claiming fraudulently to be delivering its services or using the body’s brand and reputation to mislead members of the public. Where people seek to scam and defraud by falsely claiming to be acting on behalf of the body, they will be liable to prosecution under existing offences, leading to the possibility of a custodial sentence. We believe that the protections in existing offences are sufficient and I therefore urge the noble Baroness to withdraw her amendment.

[Baroness Drake]

I thank the Minister for his response. I am not sure all my questions were answered, particularly on how to protect from the mimicking of existing bodies that go into the organisation, while they still have credibility, until the new body’s name becomes absorbed by the public. However, in responding to his points, I borrow the phrase of the noble Baroness, Lady Kramer: the Bill needs to be belt-and-braces in terms of it being a criminal offence to mimic this body.

The new body’s guidance will influence people’s decision-making—that is why it is being set up. It recognises a market failure and many consumers who would use the guidance service could be at risk if they go in the wrong direction and to an organisation which is mimicking it. I note the Minister’s point that my amendment would not cover all the circumstances of the criminal offence, but the fact that my amendment could be improved is not a reason for not having explicitly in the Bill a provision that expressly says it is a criminal offence to mimic this body.

There are two strands to my argument: first, it should be expressly in the Bill that it is a criminal offence to mimic, impersonate or imitate the service of the single financial guidance body; and, secondly, there must be some reference to the legislation under which that would be an offence. A Bill would normally refer to the legislation or spell out specifically new legal provisions about the criminal offence. At the moment, however, the Bill is silent on the issue. That is a gap in the Bill. I beg leave to withdraw the amendment.

Financial Guidance and Claims Bill [HL]

Debate between Lord Young of Cookham and Baroness Drake

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 6th September 2017 Lords Chamber

[Lord Young of Cookham]

I would love to give a direct and helpful response to the noble Lord’s very reasonable question. It would be irresponsible of me so to do. There are a lot of government departments involved in this. I cannot give an exact timetable at the Dispatch Box today, but I will make some inquiries and see whether we can shed some light on a publication date perhaps later in our proceedings.

I think I was at the end my peroration, imploring the noble Baroness, Lady Drake, to withdraw her amendment.

[Baroness Drake]

I thank the Minister for his reply. I totally disagree with most of what he said. I thoroughly agreed with the bit where he agreed with my analysis— it was just the bit about the amendment not being practical. This will be neither onerous nor expensive, which is really his only argument against it. This is not saying to map every problem that contributes to financial capability or financial exclusion, but to give a report that sets out in the methodology how best to make an impact assessment across government departments when they are pursuing their policy.

This is not novel; it is a methodology and a discipline that operates in a range of areas. A huge amount of work has already been done. A national strategy has already been created by the work of the Money Advice Service—there is already its capability survey. It has mapped the problem. I was rereading it over the weekend. There is no need to reinvent the wheel. A lot of that work exists and it is an organisation that is going into the new organisation. The Bill already gives to the new financial guidance body responsibility for co-ordinating and developing a national strategy. The Government have already given it the heavyweight bit, which is to co-ordinate and develop the national strategy, but ensuring that that strategy is effective and delivered—ensuring that the whole machinery of government is responsive to the challenge—is a methodological challenge in terms of what I am proposing on how you assess the impact so you can take it into account.

I do not accept that it is expensive or onerous. It is a challenge of how one guides departments to make those impact assessments. There is plenty of advice and guidance from the NAO, other government departments and other bodies that have given guidance to the Government on how to make impact assessments. If there is such a resistance to making impact assessments, how is the Prime Minister to meet her commitment? If she wants to make the Government function better she has to stand back, look at the problem and make an assessment. All I am saying here is that simply giving a budget to an NDPB and saying, “Get on with developing and co-ordinating a strategy; we as a Government have now discharged our function”, is not sufficient. The whole machinery of government has to be told that when it comes up with its actions or policies that it has to assess the impact it will have on capability and debt. The Government will go on to make their policies, but they have to put a discipline in. Just handing over the more labour-intensive bit to the NDPB, not the least labour-intensive bits that I am suggesting, will not get good outcomes for the country.

I reject the premise of the Minister’s argument that it will be very expensive and labour intensive to do. A lot of the groundwork has already been done by the MAS. None the less, I beg leave to withdraw my amendment.

Pension Schemes Bill [HL]

Debate between Lord Young of Cookham and Baroness Drake

Committee: 2nd sitting (Hansard): House of Lords
Monday 28th November 2016 Lords Chamber

[Lord Young of Cookham]

My Lords, government Amendment 57 would allow the Pensions Regulator to issue a pause order to an existing master trust at any point between the scheme submitting an application for authorisation and the decision on the application becoming final, regardless of whether or not a triggering event has occurred in relation to that scheme. Once an existing scheme has submitted an application for authorisation, the Pensions Regulator will have access to a significant amount of new information about the scheme. That information may alert the regulator to members’ interests or assets being at risk in the scheme. Clearly, the regulator will not grant authorisation in such circumstances but it needs to be able to take immediate steps to protect the members.

A decision to refuse authorisation is one which must be taken by the determinations panel. It is right that this is so, but it means that there could be a period of time between the regulator recommending to the determinations panel that the scheme should not be authorised and the panel reaching its decision. During this time, the interests of scheme members need to be protected. The Government’s proposed amendment therefore provides that the Pensions Regulator may make a pause order in relation to a master trust scheme which has submitted an application for authorisation,

“if it is satisfied that—

(a) there is, or is likely to be if a pause order is not made, an immediate risk to the interests of members under the scheme or the assets of the scheme, and

(b) it is necessary to make a pause order to protect the interests of the generality of members of the scheme”.

These conditions mirror those we have just been discussing for making a pause order following a triggering event.

The proposed amendment would introduce an important protection for the members of existing master trust schemes during the period when such schemes are applying for authorisation. In the light of what my noble friend Lord Freud has just said, I too apologise for not making this provision in the Bill as introduced, and I beg to move.

[Baroness Drake]

My Lords, I intervene at least for the record. It is absolutely understandable why the Government seek to extend the pause-order powers to a master trust which has not yet received authorisation if the members’ interests are at risk. I will not repeat the arguments that I made when speaking to Amendments 46 and 50, but they remain valid here. During the period of the pause order which is applied in this circumstance, the issues of what happens to the contributions to which members would otherwise be entitled and how those vulnerable to loss of payments during a pause order are treated remain equally valid under this provision as under the previous one. However, I understand why one would want to extend the pause-order power to an unauthorised scheme.

Pension Schemes Bill [HL]

Debate between Lord Young of Cookham and Baroness Drake

Committee: 1st sitting (Hansard): House of Lords
Monday 21st November 2016 Lords Chamber

[Baroness Drake]

I listened carefully to what the Minister said. Clause 39(1) has two parts, (a) and (b). Paragraph (a) would apply some of the modified applications in respect of schemes that are currently not master trusts, while paragraph (b) would disapply some of the provisions in respect of schemes that are already recognised as master trusts. There is no question of their identity under Clause 39(1)(b): they are master trusts. The Minister said that the Government’s policy was that they would not modify any application on the authorisation criteria for master trusts, or that they would modify those criteria for existing master trusts only if there was an alternative regulation in place somewhere else. Are we therefore talking about a substitution, so that the authorisation criteria for master trusts would be modified only if there was a pre-existing regulation or piece of legislation that met the part that it needed to play? Is that what I understood him to have said?

[Lord Young of Cookham]

The noble Baroness has accurately summarised what I said. We would use this clause to disapply only if we did not think that it was proportionate to apply the regime due to other existing protections in place.

Pensions: Sale of Annuities

Debate between Lord Young of Cookham and Baroness Drake

Wednesday 19th October 2016 Lords Chamber

[Lord Young of Cookham]

I am enormously grateful to my noble friend, who has good knowledge of the workings of the City. As he implied, it has become increasingly clear that creating the conditions that will allow a vibrant and competitive market to emerge, with multiple buyers and multiple sellers of annuities, could not be balanced or achieved without sufficient consumer protection. After having drilled down and consulted regulators, consumer organisations and other stakeholders, the Government have come to the conclusion that it would not be in consumers’ interests to continue with this policy.

[Baroness Drake (Lab)]

I agree with the Government’s decision and I believe that the Chancellor has called time on a bad policy. I feel it now and I certainly believed it when it was put. The risk to annuity holders of trading in a secondary annuity market are extremely high and the complicated regulatory requirements to protect them in such a market would undoubtedly mean that the costs would have been transferred to the consumer. It was also evident that there would be insufficient purchasing in that market. All these issues were raised by my noble friend Lord McKenzie, other noble Lords and me when this enabling legislation was debated. It was clear what the problems were but the Government were determined to push ahead. Why did the Government put enabling legislation in place before they had satisfied themselves that the creation of a secondary annuity market was a viable policy, when it was absolutely evident that all the problems which have now been deployed for not proceeding with a secondary annuity market existed then and people articulated them very clearly? That is the problem. It was clear that the secondary annuity market would not work, so why was enabling legislation rushed through?

[Lord Young of Cookham]

In all seriousness, I commend the noble Baroness on her foresight in being able to see in March 2015 that this was not a runner. That was not the view of many financial commentators at the time. It was seen to be consistent with those who had not yet reached retirement age and therefore had the freedom not to have an annuity. It was seen to be right to extend that freedom to those who had already purchased an annuity. In principle, it was the right thing to explore but, as I said in response to my noble friend, as we drilled down it became clear that there was not the secondary market that was necessary. Moreover, those who were going to sell their annuities would have had to have a medical examination, they would have had to pay brokerage charges and they would probably have faced administrative costs. It would have reached only a relatively small percentage. For all the reasons she has given, we have come to the same conclusion as the noble Baroness, albeit a little after her.