I hope that the hon. Gentleman will allow me to make some progress in the limited time available. I will try to give way later.
The right hon. Member for Berwick-upon-Tweed mentioned the PIA. I reiterate my belief that its establishment may have advantages. I am subject to some limitation: I must wait for a report that I am expecting from the Director General of Fair Trading about the competition aspects before I can extol the PIA with more enthusiasm.
However, although it may not be the only show in town, I think it is the best show in town and that it is "on track". I hope that the various constituents of FIMBRA and LAUTRO will view it favourably. I also believe that it should not, and will not, be deflected by the self-interest of some of its detractors. I hope that its prospectus will be carefully and favourably considered.
The right hon.Member for Berwick-upon-Tweed also spoke of the need for tougher statutory regulation. I would argue that that is exactly what we have tried to introduce, within the ambit of the Financial Services Act. The hon. Member for Edinburgh, Central, with his revolutionary approach, would seek to cast aside our present system in favour of a lurch into the unknown—a new direct, dirigiste statutory system of regulation. As my hon. Friend the Member for Ryedale (Mr. Greenway) said, we do not support such a system.
What I found most incredible about the speech of the right hon. Member for Berwick-upon-Tweed was his comment, after he had made the points that I have mentioned, that he did not agree with the motion but would nevertheless vote for it. That is another typical example of the Liberal Democrats' wish to appeal to all aspects of opinion.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill), whom I acknowledge as chairman of the all-party occupational pensions group, made an outstanding speech. He spoke about the KPMG report, and said that the scale of inappropriate selling may not be as widespread as some alarmists have suggested. I agree entirely.
The degree of non-compliance with the rules of conduct does not necessarily translate itself equally into the extent of possible mis-selling or disadvantaged selling. That is why the Securities and Investments Board has established a steering group to look into these matters and take a considered and careful analysis of the extent to which things have gone wrong.
My hon. Friend the Member for Bournemouth, West also said that the SIB should have insisted from the beginning on one self-regulating organisation rather than two for the retail sector. Because he was a member of the famous Financial Services Bill Committee, my hon. Friend will remember that there was an argument in the mid-1980s about not having a streamlined, simplistic approach towards regulation, and that there might need to be diffusion.
With the benefit of hindsight, that was an erroneous judgment about how things should or would turn out. The legislation does enable a more streamlined structure to be delivered, and that is exactly what is happening.
The Government's approach has been to seek to maximise within the existing legislation the powers that are available. Andrew Large's report, which I wholeheartedly endorse and support, is determined to do exactly that, by bringing about a quantum leap in the standards and adequacy of investor protection, by using its powers of enforcement, by having more adequate standards of monitoring, and by ensuring that the competence of the SROs to oversee is more adequately met. I believe that it has already signified that such changes are in the making.
My hon. Friend the Member for Bournemouth, West spoke also about the problems of professional indemnity insurance. The PIA is aware of the problem. Cover is available, but I acknowledge that it is at a price. I expect the PIA to look at that.
My hon. Friend made an important point about the training of trustees. That was looked at by the Goode report. It made a number of recommendations in that regard, one of which was that companies should allow time off for their employees who are trustees of occupational pension trust schemes, so that they can engage in training. I attach great importance to the training of trustees, and it is an important recommendation.
The hon. member for Great Grimsby (Mr. Mitchell) is not currently in the Chamber, but he raised the problems of the cost and burden of commission charges. He said that he felt that, in future, pension provision would be inadequate. That point was picked up by my hon. Friend the Member for Havant (Mr. Willetts), who said that he did not expect a demographic time bomb to explode. However, a theme running through much of the debate was whether provision, in addition to that provided by the state, will be adequate for the long-term future, and whether it will disappoint those who have contributed to it.
We know that the size of the working population in this country will diminish relative to the pensioned population. Currently the ratio is about 3.3:1. Over the next 50 years, it will reduce to 2.5:1. That need not necessarily bring about major problems if the economy continues to grow, and grows substantially, and if both the private and public sectors can maintain their obligations.
However, if the state is not to place an impossible burden on this and future generations, the case can be argued for increasing private provision. That is why the Government have supported the case for personal pensions. That is why the arguments for deferred consumption and displacing spending now for longer-term provision to care for an increasingly elderly populace are well made, and will be delivered more efficiently through the private rather than the public sector.
My hon. Friend the Member for Havant made an extremely telling and compelling speech. He denounced Labour's inability to understand that the labour market has changed. Such changes make more appropriate our provision for personal pensions rather than for a monopoly of state schemes. My hon. Friend also said that the concern about transfers was better founded than that about opt-outs. That is absolutely correct.
The hon. Member for Warwickshire, North (Mr. O'Brien) said that there was a crisis of confidence in the industry. That is an overstatement. There is legitimate concern about the problems that we have been debating, but it is in no one's interest to be alarmist. The Government have sought to be neither alarmist nor complacent about those problems. The hon. Gentleman said that the PIA might not have sufficient resources, but it has also been argued that it is going to make too much of a demand by way of subvention on its members.
It is true that the projected costs for the new PIA will be more than the sum total of the existing running costs of LAUTRO and FIMBRA, but good regulation costs money. Also, there is a clear trade-off between the cost of compensation, which is made if there is inadequate regulation, and the cost of regulation itself. The prospectus for the PIA contains reasonable and modest proposals for funding such activities.
The hon. Gentleman also spoke about Mr. Palmer and Miss Colette Bowe, the chairman and chief executive of the PIA. I consider Mr. Palmer to be well qualified to do the job. He gave considerable public service as a member of the board of the SIB, and it is hurtful and inaccurate to suggest that he is unfit to fulfil the valued role that he is currently undertaking.
My hon. Friend the Member for Ryedale spoke about the Insurance Brokers Registration Council. It is interesting that it has a lower incidence of problems with transfer business: that is indicative of the IBRC's high standards. He also said that a new disclosure regime must put tied agents and independent intermediaries on the same footing. That is an extremely important point, which was also raised by my hon. Friend the Member for Romsey and Waterside (Mr. Colvin). People must understand that the intention is that there should be a more level playing field between tied representatives and independent financial advisers.
For many years, we have been all around the houses on the issue of commission disclosure, and it was only when my right hon. and learned Friend the Chancellor of the Exchequer faced up to the problem, made a decision and ensured that it applied not only to independent financial advisers but, on an equivalent basis, to the management charges of the tied sector, that we witnessed a significant change, which has been widely welcomed not only in the financial services industry but by the investing public.