HC Deb 08 November 1982 vol 31 cc304-5
13. Mr. McCrindle

asked the Minister for Trade what consultations he has had recently with the British Insurance Association or the Life Offices Association on future legislation connected with insurance; and if he will make a statement.

Dr. Vaughan

I am in frequent contact with both the British Insurance Association and the Life Offices Association over a number of matters, including commissions. I particularly welcome the good news reported in the press today that the Life Insurance Association is preparing a plan for a new voluntary code. I hope that consumer bodies will be asked to co-operate in this.

Mr. McCrindle

Will the Minister confirm that the Government oppose the suggestion that the commissions paid to intermediaries should be controlled by Act of Parliament, preferring either a voluntary agreement or the operation of market forces?

Dr. Vaughan

We should certainly prefer a voluntary agreement, as I think the industry well understands.

Mr. Lofthouse

Does the Minister appreciate the damage that has been done to the good name of Lloyd's and to the British insurance business generally by the recent alleged scandals? Does he agree that the revelations in the Minet and Howden cases show that self-regulation by Lloyd's cannot be allowed to continue?

Dr. Vaughan

I do not accept what the hon. Gentleman says at all. The fact that an investigation has been necessary in one or two instances should not be allowed to detract from the international reputation of Lloyd's. It is important to recognise that Lloyd's is a national asset doing a very good job both in this country and internationally.

Mr Moate

Does my hon. Friend agree that if we are to maintain that international confidence in Lloyd's, which is indeed a vital national asset, a more fundamental reappraisal is needed of the methods of supervision and control exercised by his Department? Does he agree that much of the advice and supervision provided by the Department in recent years has not been of the highest quality? What steps are being taken to deal with that?

Dr. Vaughan

As my hon. Friend knows, this was extensively debated when the Lloyd's Bill was before the House. It is now for Lloyd's to proceed as quickly as possible to set up its own voluntary arrangements.

Mr. John Fraser

Does the Minister recognise that the Opposition have been as jealous as anyone to protect the reputation and strength of Lloyd's, and that that is why we supported the Lloyd's Bill, to give it a modern constitution? Nevertheless, does he recognise that the scandals at Minet and Howden justify our concern that self-regulation—the Minister can use only the Companies Act—may not be enough? Does he agree that other forms of statutory and departmental supervision may not be inconsistent with self-regulation for Lloyd's, and will he make an early statement on these matters to the House?

Dr. Vaughan

As the hon. Gentleman knows, we have considerable powers under the Companies Act. The use of section 165 both for the Howden inquiry and now for the Minet inquiry is an important factor. I think the hon. Gentleman will agree that the Department has acted very rapidly on this issue. It is now for Lloyd's to pursue the other arrangements in setting up its voluntary code of practice as quickly as possible.