Pensions

Lord Phillips of Sudbury Excerpts

Thursday 12th December 2013 Lords Chamber

[Lord Newby]

My Lords, as the noble Lord will be aware, the big new development in pensions is around auto-enrolment. In this area, the Government have set a cap on allowable fees, precisely to deal with the problem of high fees going forward. More generally, the FCA is undertaking a thematic review of annuities, which will look at fees among other things. There is a lot going on and we will see action without needing to set up any further bodies to bring it about.

[Lord Phillips of Sudbury (LD)]

My Lords, would the Minister not accept that, after the latest in an apparently endless series of disillusioning revelations about the cynicism of too many parts of the financial sector in particular, it is about time that we as a Parliament, and indeed the Government, made clear to the people of this country that there is a limit to what we can do in these issues? They bear on profound moral issues. Perhaps the time is right for us to, in effect, throw the ball back into the court of Mr and Mrs Britain and call upon them to exercise their own, individual moral autonomy and power to effect some sort of reformation of what is becoming a very depressing state of affairs.

[Lord Newby]

There are obvious limits to what government and Parliament can do, but I have always believed that one of the very important things that Parliament can do is to act as the bully pulpit and set out what it thinks is the correct way of behaviour. In terms of the financial institutions we have instituted, as the noble Lord knows, a number of pieces of legislation in this area but, as the Parliamentary Commission on Banking Standards pointed out, culture is very important—that is, the culture of the industry and also of consumers. A big problem around pensions in particular is that virtually no consumer understands the product that they are buying, which makes it very difficult for us to get people to accept responsibility. They find it very difficult to get to grips with a pretty complicated product.