Clause 62
Pensions Bill
4:15 pm
John Greenway (Ryedale, Conservative)
I am delighted to welcome you to the Chair this afternoon, Mrs. Anderson. I am sorry that I was absent last week, but I was not too well. However, I am much better now.
I share the concern of my hon. Friend the Member for Eastbourne about some of the amendments tabled by the hon. Member for Rochdale, but I want to take a slightly different approach from him to the matter of an overriding duty to work in the best interests of members and how far the remit of PADA actually runs. I have sympathy with the view that, if we are asking through the scheme that there should not be a levelling down from existing occupational schemes and that people already enrolled in existing schemes should be encouraged to stay in them, surely PADA’s remit needs to be slightly more widely drawn than that suggested by my hon. Friend. However, the hon. Gentleman is on to something by talking about an overriding duty to work in the best interests of members.
PADA is an extraordinary beast. It is a completely new and unique concept, yet it will be giving information and guidance to people. As we discovered at the evidence-taking session in the Boothroyd Room, there will be a lot of media comment about whether a personal account is good or bad for a lot of individual people on low incomes. Given the way in which that publicity will be dealt with and how people will receive and react to it, we cannot see this issue in isolation from what is happening in the pensions market and in the financial services industry in general.
One of the overriding principles that the Financial Services Authority has introduced into financial services regulation in the last couple of years is the principle of treating customers fairly. That is in vogue at the present time and all finance institutions are struggling to come to terms with what it actually means—it is a nice easy statement. Treating customers fairly applies to companies and finance institutions, including many of the pension companies that are offering group personal pension schemes. We know that there as an issue about whether those can be regarded as suitable for auto-enrolment and meeting the European Union directive on distant selling, and the way in which that will be cleared up. To add the principle of an overriding duty to work in the best interests of scheme members, or something similar, would help. It would help the authority and, in the long run, it would provide some comfort to the many millions of people who are going to join the personal account scheme in the years to come.
Today, and even in the next three or four months as the Bill progresses through both Houses, we cannot envisage where all of this will end up. If we were dealing with a charity, there would be clear charity law with similar implications. If we were dealing with an organisation such as an insurance company, for the purposes of financial service regulation, there would be something of this nature in the principles under which it was regulated. It seems that my hon. Friend the Member for Eastbourne and the hon. Member for Rochdale are both on to something with these amendments regarding an overriding duty to work in the best interests of the members of the scheme. This is the only that opportunity we have, as the Bill progresses, to put this measure, or something similar, in the Bill.
There is one other way in which the Minister might consider dealing with the same point, which is to say something similar in clause 63, which relates to the directions and guidance that are given to PADA on how it carries out its duties. This is an important principle that we should grasp. It should be incorporated in the Bill at some point, if not today, as a clear duty of the authority.