Financial Advice and Services

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 14th October 2004.

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Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford 11:30 am, 14th October 2004

If he will reform the rules governing the delivery of financial advice and services through the workplace.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

Yes we will, as part of the two-year review of the Financial Services and Markets Act 2000. We have had a large and supportive response to the consultation on our proposals, which concluded in May. I will announce the key outcomes of the review shortly. The changes will make it easier for employers to promote their pension scheme in the workplace, subject to safeguards.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

I thank my hon. Friend for that reply. Is he aware that in the evidence to the Treasury Committee on restoring confidence in long-term savings, there was widespread agreement on the advantages of being able to promote pension and savings schemes in the workplace, but at present employers are prevented from doing that? An employer cannot, for instance, promote a stakeholder pension scheme to which they contribute, although a very similar occupational scheme could be promoted. Does my hon. Friend agree that unless these legal inhibitions and anomalies are removed, the pension and savings issues raised by the Turner commission report this week cannot be properly addressed?

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

My hon. Friend makes a very important point. I had noticed that that point had been made in the evidence and I pay tribute to him for his work on the Select Committee and on the all-party group on financial markets and services. Research by the Association of British Insurers has shown that about 40 per cent. of employers feel inhibited from promoting their schemes by the current financial promotion regime. We are proposing an exemption from the regulations for employers so that they can provide advice to employees on their pensions without having to be regulated by the Financial Services Authority, along the lines that my hon. Friend proposes. I also take his point about urgency. I want to announce the outcome of the two-year review before Christmas and I hope that the regulations will be in place by next spring.

Photo of David Laws David Laws Shadow Chief Secretary to the Treasury

Is it not difficult for advisers to give good financial advice when Government policy keeps changing so rapidly, particularly in areas such as pensions? For example, can the Minister give people any guarantee that the pension credit will still be around in 10 years' time?

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

I think the hon. Gentleman would acknowledge that there have been enormous gains from the economic stability that we have enjoyed since 1997, including confidence for people making their preparations for the future. The pension credit has been an enormous success and I can certainly say to him that, subject to this Government's being re-elected, we will maintain the policy that has done so much to increase the incomes of the less well-off pensioners.