Home Income Equity Plans

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 11th March 1992.

Alert me about debates like this

Photo of Paul Flynn Paul Flynn , Newport West 12:00 am, 11th March 1992

To ask the Secretary of State for Trade and Industry what initiatives he intends to introduce to assist those in financial difficulties arising from their involvement in home income equity plans.

Photo of John Redwood John Redwood , Wokingham

There are several ways in which assistance might be available to people who have been caught up in some of those unfortunate schemes. If, for example, there is any question of repossession, the individual should go to his building society, because those societies have said that they want to avoid repossessions wherever possible. If there has been an investment failure, people may be eligible for compensation either from the investment company or from the compensation scheme, depending on the precise circumstances of the individual case.

I do not want to hold out false general hope, but in some cases assistance might be available. I suggest that any hon. Member with a constituency problem should get in touch with the Securities and Investments Board, which is taking the lead in this matter and which knows the individual details of specific cases.

Photo of Paul Flynn Paul Flynn , Newport West

The Minister is trying to do a Pontius Pilate act on the weakness of the regulatory system set up by his Government. There are thousands of victims of those home income equity plans. Virtually all are elderly people, mostly widows, who have bought their own homes and were sold those plans through so-called independent financial advisers. We should make it clear that those people are not independent at all, but profit-hungry, commission-hungry salesmen. They have conned those elderly people who now have the dreadful prospect of losing their homes in their 60s and 70s because of that or because of the weakness of financial regulation. Will the Minister give a guarantee in the last few days of his Government that none of those elderly people will have their home repossessed?

Photo of John Redwood John Redwood , Wokingham

Obviously I want to avoid that, which is why I said that those people or their advisers or friends should get in touch with the building societies, which have told us that they want to avoid repossession wherever possible.

The hon. Gentleman's extraordinary attack on independent financial advisers was very unwise. If someone is registered as an independent financial adviser, it is his or her duty to give independent advice and that adviser is regulated by the appropriate body to do that. If the hon. Gentleman can give examples of IFAs who have failed to give good independent advice, he should refer them to me, or direct to the regulatory body, which will take them up as a matter of urgency. Of course I give the hon. Gentleman the pledge that we shall take up any of those cases, should he send the details to me. However, the SIB is in charge of this and I refer hon. Members to it if they have problems.

Photo of John Butterfill John Butterfill , Bournemouth West

Will my hon. Friend accept my thanks for the helpful way in which he dealt with my representations on this subject? Does he accept that it is largely due to the regulatory framework that he has put in place that the activities of, for example, the Aylesbury Group have now been accepted for the investors compensation scheme? Will he also impress upon the building societies involved that they have a duty and an obligation to ensure that people are not evicted from their homes until the compensation scheme can take effect?

Photo of John Redwood John Redwood , Wokingham

I give that undertaking. My hon. Friend's comment is extremely helpful. He has done a great deal of important work to expose the problem and to help us find a solution to it. As he said, in some cases there are already agreements that compensation could be made under the investors compensation scheme. I welcome that, as it is important that compensation should be made available where appropriate.