Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill

Baroness Bennett of Manor Castle Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 19th October 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to make two fairly brief points in this short debate with a limited number of participants, which is disappointing given the importance of the issues behind the Bill. I go back to a much larger Bill that had a little more participation, the then Financial Services Bill, and to the Second Reading speech of the noble Lord, Lord Agnew of Oulton, who said:

“we remain committed to ensuring that the UK maintains the highest regulatory standards and remains an open and dynamic global financial centre. This is even more important now that we have left the European Union … the UK must assume full responsibility for its financial services regulation ... this will be underpinned by an unwavering commitment to high-quality, agile and responsive regulation, with a focus on safe and stable markets”.—[Official Report, 28/1/21; col. 1810.]

Does the Minister acknowledge that the need for this Bill points out that our regulatory standards are not the highest they could be, that in fact they are disastrously poor, and that this is a threat to the security of us all? Further, will he acknowledge that words such as “competitive”, “dynamic”, “agile” and “responsive” are not compatible with the desire expressed for a safe and stable financial market?

As we heard very often from the Government during the passage of the Financial Services Bill, the financial sector is regarded as a source of great profits, but we see the cost of those profits in not just the financial suffering of the people being compensated under this Bill but in the human impact. We are talking about people who have seen large chunks of their pensions savings and their entire future life disappear, with years of uncertainty ahead of them. We think about the mental and physical health impact that has on people and the threat that the financial sector is presenting.

I will move very briefly to the specifics of the Bill, and say that I look forward to the speech of the noble Lord, Lord Sikka, who I have no doubt will address regulatory failure in much greater detail. A couple of questions need to be asked. The Government have acknowledged that the LCF investors were innocent, duped and failed by the regulator, yet there is a cap on compensation of £68,000. This is a government failure; should we not be saying, as we have heard in other debates in your Lordships’ House, as with the building safety scandal, that government failure should be met by full government compensation, not people forced to lose out through no fault of their own? What about investors in Blackmore Bond, in Basset & Gold, in secured energy bonds and, indeed, in Connaught, where it was acknowledged that regulatory supervision was “not appropriate or effective”? The Government have said that this particular scheme—this Bill—has come about as a result of unique and exceptional circumstances, but does the Minister acknowledge that there is nothing unique or exceptional about this: this is business as usual in our financial sector far too often?

I turn, very briefly, to the pension liberation fraud. We have seen pensions treated as a market. It is clearly not a safe or stable market, as the noble Lord, Lord Agnew, was saying in debates on the Financial Services Bill. Should it really be a market at all?