§ 3. Mr. Butterfill
asked the Chancellor of the Duchy of Lancaster whether he is satisfied that the revised approximations of the surrender value of life assurance policies proposed in the revised Lautro rule book will give sufficient information to allow investors to make an informed choice of policy; and what observations he has received on the above matters from the Director General of Fair Trading and the National Consumer Council.
§ The Parliamentary Under-Secretary of State for Corporate and Consumer Affairs (Mr. Francis Maude)
Subject to the Secretary of State's statutory responsibilities in respect of competition, it is for the Securities and Investments Board to satisfy itself about the adequacy of Lautro's rule book. The Director General of Fair Trading is at present considering the competitive effects of Lautro's proposed rules and will report to the Secretary of State in due course. No observations on these proposals have been received.
§ Mr. Butterfill
My hon. Friend will no doubt recollect that the subject of surrender values has been of considerable concern to the constituents of many hon. Members and was the subject of considerable debate during the Committee proceedings on what is now the Financial Services Act 1986. Will my hon. Friend undertake to consult urgently on this matter, since it seems to me that at present the Lautro rule book is most unsatisfactory?
§ Mr. Maude
I hear what my hon. Friend says. I stress again that this is a matter for the SIB and for the Director General of Fair Trading. We have a statutory duty to consider the director general's report in due course and to 285 consider the request of the Securities and Investments Board for consent to recognise Lautro. It would be wrong of me to comment in advance of receiving those representations.
§ Mr. Campbell-Savours
Do the proposals in the Lautro rule book enable investors to understand the background to those companies in which they are perhaps investing their money? Would investors in insurance policies know that it was the double-crossing Prudential that sold out 4 per cent. of its Matthew Brown holding and enabled Scottish and Newcastle Breweries to move in and threaten the future of jobs in my constituency?
§ Mr. John Greenway
Does my hon. Friend accept that the surrender value of a life assurance policy cannot be guaranteed and that recent events on world stock markets highlight the fact that, for many investors, a with-profits life assurance policy represents the best option, given that it provides many guarantees—unit-linked and other policies—where the direct relation between the value of funds and stock market prices can be all too difficult?
§ Mr. Gould
With the City now in the throes of a stock market collapse, is not the failure to bring fully into effect the Financial Services Act a gross dereliction of duty by the hon. Gentleman's Department?
§ Mr. Maude
The hon. Gentleman, when he has time to consider, will realise the fatuity of that observation. He knows that this is a complex structure that has to be brought into force at the right time. There is absolutely no point in having the wrong system in place earlier. It is much better to get the right system in place. It will be brought into force at the earliest opportunity. He will know, in any event, that a large number of powers under the Act are already in force and being used.