Chris Leslie
Main Page: Chris Leslie (The Independent Group for Change - Nottingham East)Department Debates - View all Chris Leslie's debates with the HM Treasury
(13 years ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
I pay tribute to my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex), and to the hon. Member for Vale of Glamorgan (Alun Cairns) and other Members, for drawing attention to this exceptionally important and complex issue. It is simply not right that people, many of whom have worked hard on modest incomes and have saved money in what they reasonably thought to be a responsible way, stand to lose significant sums. We welcome the Financial Services Authority’s efforts in securing a compensatory offer from the parties involved, which will be administered through the Capita financial managers, but although up to 70% of the sum invested could be returned to investors via the consumer redress scheme, many will be dissatisfied because the amount falls far short of their original investment.
I want to make five quick points. First, on the unfair constraints on the choices for out-of-pocket investors, there have been reports that the FSA is reluctant to set out a full statement of events surrounding the Arch Cru failure, possibly until after the closure of the redress scheme. I would be grateful if the Minister would agree that that would be an extremely unfortunate state of affairs, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) and the hon. Member for Hexham (Guy Opperman) have indicated. The FSA should either set out its understanding and explanation while the redress scheme is extant, or the scheme’s closing date should be extended to allow the full facts to emerge before investors are forced to decide whether to accept the final settlement. Does the Minister agree that that would be reasonable?
Secondly, can the Minister clarify the potential role of the Financial Services Compensation Scheme? The FSA has been brokering the voluntary settlement scheme, but at what point will the option of claiming anything via the FSCS be made clear to investors?
Thirdly, I want to ask about the lessons to be learnt about Capita and the role of the regulators. Irregular practices clearly took place, and an investigation into the regulator’s handling of the Arch Cru scandal is merited. Hon. Friends are pressing the Minister and the Treasury to look into the behaviour of the regulator, and I would be grateful if the Minister could address that in winding up the debate. Did the regulators check Capita’s capabilities? Compliance work is usually done by banks, but the Arch Cru fund was compliance-managed by Capita and, as we have heard, questions have been asked about the adequacy of Capita’s business resourcing and its internal checking procedures for ensuring the thoroughness of its important responsibilities.
Fourthly, we must have tighter regulation of investment fund descriptions, and there is an urgent need to ensure that consumers are protected from exaggerated marketing terms. For instance, do we need clearer rules about the use of terms such as “cautious fund”? The hon. Member for Hexham highlighted the term “ideal for pension transfer”, which goes to the nub of the marketing mispractice involved. “Guaranteed investment,” “absolute returns” and “balanced funds” are all used frequently in investment schemes, but I am not sure that we have the right regulation of the use of marketing arrangements.
Finally, although we should not underestimate the pain, anger and distress that many people justifiably feel, we must consider the messages that this kind of scandal sends out to the public at large. This situation can serve only to undermine people’s confidence in saving for their future, doing the right thing by planning ahead and putting money aside through pensions and investments. Parliamentarians and the Government must consider not only the impact of the scandal on the people directly affected but its repercussions on people’s trust in financial products more widely.
Albert Owen (in the Chair)
I thank Members for their inventions and for keeping to time. I ask the Minister now to respond.