HC Deb 19 December 1989 vol 164 cc203-13 3.50 pm
The Secretary of State for Trade and Industry (Mr. Nicholas Ridley)

With permission, Mr. Speaker, I wish to make a statement about Barlow Clowes.

The report of the Parliamentary Commissioner for Administration on Barlow Clowes is published today, as are the Government's observations on it. Copies of both are available in the Vote Office.

The House will be pleased to know that, after very careful consideration, the Government have decided, in the exceptional circumstances of this case and out of respect for the office of the Parliamentary Commissioner, to make substantial ex gratia payments to all investors who have suffered loss. I shall give the details later. Equally, I want to make it clear that the Government do not accept the Parliamentary Commissioner's main findings, nor are the Government legally liable.

These are important questions upon which I want to make the Government's position clear. I am therefore publishing separately today the Government's observations on the PCA's report. I hope that right hon. and hon. Members will read these observations carefully: I will not rehearse the detailed arguments here.

There are, however, a number of unusual features which taken together distinguish this case from other business failures. Although at the relevant time the Government had started on the process of overhauling the legislative background, before April 1988 the regulatory machinery was inadequate. It is also true that a large number of investors, many of them elderly, have suffered hardship. Many believed, although wrongly, that they were investing in gilts. They were led to believe that their investment was safer than it was.

When disagreeing with the findings in the PCA's report, the Government are not asserting that the conduct of the Department was beyond criticism, given the benefit of hindsight, but in the Government's view, the Department's handling of the case was within the acceptable range of standards reasonably to be expected of a regulator.

For the reasons that I have given, the Government have decided to offer substantial payments, without admission of fault or liability, to investors who have suffered loss.

The Government have decided that investors who invested up to £50,000, including reinvested interest calculated at building society rates, should be able to recover 90 per cent. of their investment. It is important to maintain the principle, which the PCA recognises, that investors should bear some of the loss themselves. This is particularly so for larger investors, who must be expected to bear a greater part of the responsibility for their own decisions. To reflect this, the Government have decided that investors should be able to recover 80 per cent. of their investments between £50,000 and £100,000 and 60 per cent. of investments over £100,000. The detailed terms of the scheme are set out in the Government's printed observations.

The scheme will be administered on the Government's behalf by firms which are already acting in the liquidation and receivership of the Barlow Clowes businesses. A letter has today been sent to all investors, giving them an outline of the Government's proposals. Detailed terms will be sent in mid-January, and we hope that processing of payments will be completed in February.

The Government believe that there are others whose role in the Barlow Clowes affair deserves close examination and who cannot escape part, at least, of the blame for what happened. It will be a condition of payment that investors assign to me their rights in the liquidation and receivership and against third parties. I give notice of our intention to pursue vigorously any claims which show prospects of reducing the cost to the public purse of these payments.

Parliamentary approval of this expenditure will be sought in a Supplementary Estimate in due course. Pending that approval, urgent expenditure estimated at £150 million will be met by repayable advances from the Contingencies Fund. Receipts from subsequent recoveries will be credited to the Consolidated Fund.

Recent legislation and recent jurisprudence make it clear that regulators are not liable to investors in the exercise of their regulatory functions. The Government do not believe that it would be right for this case to be treated as a precedent, and if similar proposals are made in the future, they intend to respond to them in the light of the principles set out in their observations. However, because of the exceptional combination of circumstances in the Barlow Clowes affair, the Government have decided to respond generously to relieve the hardship caused to large numbers of people.

Mr. Gordon Brown (Dunfermline, East)

I welcome, after 18 months, this first payment to Barlow Clowes investors after the clear and unmistakable evidence in the ombudsman's report of five significant areas of maladministration by the Department of Trade and Industry.

Many pensioners have until today lost their life savings, and retired workers their redundancy payments. Can the Secretary of State confirm, in as precise detail as possible, what the average payment is likely to be, whether payments are to be made to the dependants of the 600 people who have died, whether there will be any contribution from intermediaries whom Lord Young has already criticised, whether he will definitely take court action against those whom he considers responsible to recover taxpayers' money, and whether the first payments are likely to be made before February so that investors who have waited for more than a year, some of them on the edge of bankruptcy, will not experience further delays?

I must ask why we have had to rely on the ombudsman to confirm the mismanagement, maladministration and incompetence that was widely known about more than one year ago. Will the Secretary of State explain—I acknowledge that he was not the Secretary of State at the time—why it took an internal inquiry, a departmental inquiry and now the ombudsman's investigation, instigated by my right hon. Friend the Leader of the Opposition, before justice began to be done?

Does the Secretary of State agree that the House will find it strange that he is prepared to pay out at least £150 million but he continues to deny the Government's responsibility for mistakes and does not even apologise for his Department's role? Will he confirm that, while the need for compensation is agreed, the reason for the payment of this public money—our public money—is not the fecklessness, gullibility or incompetence of the small investors but the fecklessness, gullibility and incompetence of the Government who, for months and years, ignored all the warnings about Barlow Clowes that were available to them?

Will the Secretary of State confirm that the ombudsman's conclusion is that mismanagement happened throughout the 1980s, not just in 1985 and afterwards, when the firm was licensed and relicensed? That mismanagement continued during the 1980s, with the failure to heed at least 10 warnings, including warnings from the stock exchange, the Bank of England and the regulatory bodies. Will the right hon. Gentleman now tell us who in the Government intends to take responsibility for this negligence on a vast scale that is costing huge sums of public money?

Will the Secretary of State now show that his Department has learnt some lessons so that public money will never again be used in this way? Will he compel financial intermediaries to take out indemnity insurance against negligence and fraud, ensure minimum standards of competence among intermediaries and take up the Securities and Investments Board's proposals for tougher regulation?

Will the Secretary of State demonstrate that his aim is not just to lure investors into the market place but that he regards it as his duty to give them proper protection from the unprincipled and the unscrupulous?

Mr. Ridley

The hon. Gentleman made many presumptions about the record of the regulators in my Department and what they may have done wrong. As he says, there are five charges of maladministration in the report of the Parliamentary Commissioners for Administration. I recommend him to study at length and with care those accusations of maladministration and the Government's response to them. He will notice that the only one to which the PCA attaches great significance is a new point that has never been raised before concerning the partnership in Jersey. I invite the hon. Gentleman, partial as he is, to decide whether his own thinking bears out what he said from the Opposition Dispatch Box this afternoon. He may find it does not. The first criticism of regulators in my Department dates from 1975. Therefore, he should not seek to make a party political point about the time during which these matters took place.

The hon. Gentleman asked what the payments will be. I repeat that they will be 90 per cent. of sums up to£50,000, 80 per cent. of sums between that and £100,000, and 60 per cent. of sums above £100,000. Those figures are based on taking 90 per cent. of the capital value, plus the compound interest due from the last time that interest was received by the investor up to the date of liquidation. To that 90 per cent. will be added the interest due since then. That is a generous way of recompensing those, particularly the smaller investors, who have lost money.

I confirm that the dependants or estates of the deceased will be eligible to claim their share of compensation. The hon. Gentleman knows that it is up to the Financial Intermediaries, Managers and Brokers Regulatory Association or the Securities and Investments Board to determine what to do about financial intermediaries.

We shall pursue as vigorously as we can third parties from whom it might be possible to recover some of the costs. I hope that all the money will be paid out in February, but that requires investors or their estates to make the necessary claims as quickly as possible after they receive the forms so that we can issue the payments to them. Although the gross cost of what I have announced is £150 million, the liquidators expect to be able to return more than £60 million from the funds that they still have so that the net cost will be much less, and even less if further sums are recovered from third parties.

We have decided to make these generous payments, despite the fact that the Government do not accept liability, for the reasons that I have given, plus the important additional reason, which I think the hon. Gentleman will respect, that we felt that we should respond to the recommendations for making redress put before the House by the PCA. That we have done.

Mr. Ian Stewart (Hertfordshire, North)

On behalf of many of my constituents and no doubt those of other hon. Members, I thank the Secretary of State for his full statement and the handsome scheme of recompense that he has announced this afternoon. No doubt it will be welcomed up and down the country.

When the Secretary of State reflects on the lessons to be learned from this sorry story, will he take it from me that it did not require a great deal of insight in 1985 to appreciate that the business of Barlow Clowes was not then being run in a fashion that would make it an obvious candidate for a licence? His Department's explanation that a cessation of business then would have been against investors' interests is difficult to understand, because if the money had been there, the investors would not have missed out, and if the money had not been there, there would have been no case for granting a licence at that time.

Mr. Ridley

I thank my right hon. Friend for his opening remarks. I am sure that the payments will be greatly appreciated by those who have suffered grievous loss. Many of them are poor people. On my hon. Friend's second point, I invite him to consider the extent to which what he alleges was indeed a lack of insight or whether it was a lack of hindsight. There is a great danger of mixing the two.

Mr. Alfred Morris (Manchester, Wythenshawe)

I welcome today's important step forward for the victims of this huge and vile swindle. The Secretary of State is aware of my special interest on behalf of two elderly constituents who lost not only their total life savings but their home.

Is the right hon. Gentleman aware of the further hammer blow that has hit my constituents and others today? They have received demands from the Inland Revenue for thousands of pounds of taxation that they were told by Barlow Clowes had been deducted at source. If the Government are not to take back with one hand what they give with the other, will the right hon. Gentleman urgently consult the Chancellor of the Exchequer to stop further suffering for elderly and vulnerable people?

Mr. Ridley

I am glad that the right hon. Gentleman made that point about taxation, because I may be able to help him. I am grateful for what he said about my statement. As I understand it, the Inland Revenue believes that the payments that I announced today, both of capital and in lieu of interest—it is not interest, but compensation for the interest that was not received—would not usually be subject to income tax. There will be some cases where there is a complication with the question of whether investor's funds were transferred from the international fund to the national fund. I advise hon. Members whose constituents have a tax problem immediately to get in touch with the Inland Revenue or my hon. Friend the Financial Secretary to the Treasury. I am sure that the Inland Revenue will be only too keen to ensure that the tax law is correctly and appropriately applied in all cases. It will be a considerable relief to hon. Members to know that the payments that I announced today will, in general, attract no tax.

Mr. Nicholas Winterton (Macclesfield)

As the first hon. Member to warn the Department of Trade and Industry about the activities of Barlow Clowes in late 1984 and again in early 1985, as a result of information given to me by my constituent Mr. Peter Hayes of the Plan Invest Group, I warmly congratulate my right hon. Friend on his statement. I thank him and the Government for the generous level of compensation that has been announced. It will be most welcome to the small investor, about whom all hon. Members are deeply concerned. My right hon. Friend has restored the confidence of investors in those institutions and the capital market.

Mr. Ridley

I am glad that my statement pleases my hon. Friend, whose role in this affair must be acknowledged worldwide.

Mr. Merlyn Rees (Morley and Leeds, South)

Did you note Mr. Speaker, that the Secretary of State advised my hon. Friend the Member for Dunfermline, East (Mr. Brown) to study the report carefully? Because of the way that matters have been handled today, with the report coming out at 3.30 pm and a statement being made immediately afterwards, it has not been possible to do that. We have had only a quick reading of it and of the statement.

Is it not odd that, although the Government disagree with the findings of the ombudsman—he should have the congratulations of the House because he found five cases of maladministration—they are nevertheless paying up because, they say, they like the ombudsman? It is a curious way for a Government to proceed.

Many of us will want to contact our constituents this evening and tomorrow because the mail is difficult at this time of the year. I notice that page 21 of the report states: Investors will have approximately one month to decide whether they wish to accept the Department's offer". The statement says: A letter has today been sent to all investors … Detailed terms will be sent in mid-January. Does that mean that we should tell our constituents that they have a month from mid-January or a month from now? That is the sort of question that we will be asked, so what should we answer?

Mr. Ridley

If the right hon. Gentleman reads it, he will see that the Parliamentary Commissioner's report includes the Government's decisions in relation to what he has suggested. The right hon. Gentleman will agree that it would be wrong for the major statement of important Government policy that I have just made not to be the subject of a Government announcement to Parliament. There may be a procedural difficulty here, because it is rare that a Parliamentary Commissioner's report is the subject of a statement to Parliament rather than a written communication to the hon. Member concerned. If that is not a happy procedure, I am sure that the relevant procedural Committee of the House would wish to consider it, but there are difficulties on both sides.

I have written to all investors—including, I hope, the constituents of the right hon. Gentleman—informing them of my statement today. They will receive detailed forms in the middle of January and it will be for them to claim the compensation that I have announced. If they fill in that claim form rapidly, they should receive the compensation early. I cannot guarantee that they will receive the compensation if they do not return their claim forms early —[Interruption.] I have said already that they will receive the claim forms in the middle of January. [HON. MEMBERS: "One month."] I said that we hope that all claims will then be paid during February. They cannot be paid during February if the liquidators do not receive the returned claims forms. It is entirely up to those investors who are due compensation to make sure that they get in their forms, or we cannot pay them in February. There is no cut-off date. I said that we hoped that all claims would be met by then.

Sir Antony Buck (Colchester, North)

Does my right hon. Friend appreciate that hon. Members on both sides of the House welcome the generous response by the Government to the victims of this affair? Does he agree that this may be a serious situation here, with the Government disagreeing with the findings of the Parliamentary Commissioner? Will my right hon. Friend look into that further so that the matter can be considered perhaps by the Select Committee on the Parliamentary Commissioner for Administration, of which I have the privilege of being Chairman?

Mr. Ridley

The Government are perfectly entitled to have their views about the chain of reasoning which the PCA has employed in this case; my predecessors had doubts at the time of the Le Quesne report. We, too, have similar doubts, although on slightly different grounds, this time. The Government cannot be coerced not to put forward their view of such matters.

I am sure that my hon. and learned Friend will agree that the important point is that the Government have accepted the recommendations for compensation, even though they cannot accept the reasoning. I invite the House to study the arguments on both sides, and perhaps many hon. Members will come to the conclusion that the Government were right in their reasoning.

Mr. Matthew Taylor (Truro)

The constituents of all hon. Members, including mine, who have been affected by the Barlow Clowes affair will welcome the compensation that the Secretary of State has announced. But the idea that the confidence of investors will be restored is more dubious in view of the Minister's rejection of the ombudsman's finding, which I read leaves the ombudsman absolutely unconvinced. I suspect that our constituents will be able to draw their own conclusions as to who they believe has the best judgment, the ombudsman or the Secretary of State. But can they at least be reassured that even if the right hon. Gentleman does not accept the findings, he will ensure that his officials study them and act on them to make sure that these events do not recur?

Mr. Ridley

The hon. Gentleman should know that recent legislation, to which he may have contributed, and all recent court judgments have made it clear that regulators are not liable at law for matters of this sort. That is still the position. If the Financial Services Act 1986 had been in place when these events occurred, 15 years ago, there would have been no question but that investors could have been compensated by the Securities and Investments Board scheme only if the rules of that scheme had been met. For that reason we have a different position now. But I do not believe that the principle should be allowed to be established that regulators are liable at law for any loss suffered as a result of their actions.

Mr. Michael Grylls (Surrey, North-West)

Obviously the House is very pleased to hear of such generous compensation, which will help many vulnerable people who were worried about the results of the Barlow Clowes affair. Will my right hon. Friend bear it in mind, however, that the money will come from the generality of taxpayers, most of whom did not invest in Barlow Clowes and who therefore will receive no compensation? Is it not essential for my right hon. Friend to pursue every possible avenue with the utmost vigour in his efforts to get all the money back for the good of the generality of taxpayers?

Does my right hon. Friend agree that one lesson to be learnt from the affair is that high-return investments often carry the highest risk? If they pay some attention to that factor, the public may learn the lesson so that such an awful tragedy does not occur again.

Mr. Ridley

I am grateful to my hon. Friend. I assure him that the Government will seek to make the maximum possible recovery, through the courts, from any third parties who appear to have been to blame.

My hon. Friend is right: a high-risk investment is likely to be one with a high return. It was, I believe, in recognition of that factor that the Parliamentary Commissioner suggested that there should be an abatement, which he agreed should amount to 10 per cent. for investments of up to £50,000 and a little more for larger investments.

It cannot be assumed that higher and higher returns can be offered, along with the safe knowledge that if they get through the regulator compensation will follow. That is a clear reason for not allowing a precedent to be established.

Mr. Doug Hoyle (Warrington, North)

Will the Secretary of State make it clear whether he will now publish the report by Mr. Ziman and Mr. Hoffman, the DTI inspectors who were appointed on 4 June 1988 under section 432 of the Companies Act 1985, to inquire into Barlow Clowes Gilt Managers? If not, why not?

Mr. Ridley

I have not yet received the report. When I receive it, I shall have to check with my legal advisers to find out whether I can publish it immediately, but I intend to publish it as soon as that is established.

Mr. Stephen Day (Cheadle)

May I join my hon. Friends, and some Opposition Members, who have been active on behalf of the investors in thanking my right hon. Friend warmly for his statement? Does he agree that, although the vast majority of investors will be delighted at the announcement, they will find the discussions now hovering round the technicalities of what was and was not done rather irrelevant? For the first time, those investors will be able to celebrate Christmas again. I am sure that they simply wish hon. Members to thank my right hon. Friend the Secretary of State for a very generous statement.

Mr. Ridley

I am grateful to my hon. Friend. I agree that the relief from hardship and loss is the most important aspect of today's announcement, and I hope that hon. Members will not try to make too many legalistic points that will detract from its significance.

Rev. Martin Smyth (Belfast, South)

We accept what the Secretary of State has said about the need for us not to make too many legalistic points, and I confirm, on behalf of many people in Northern Ireland, their thanks for this generous settlement. Does the right hon. Gentleman accept, however, that today's statement has not really maintained trust in financial institutions, particularly if greater responsibilities are not to be placed on the shoulders of regulators?

Mr. Ridley

I am grateful for what the hon. Gentleman said, but I believe that there is another side to the case. The risk involved in choosing where to put his money can never be entirely taken from the investor; otherwise he would always choose the highest-risk—sorry, highest-return—investment that he could find. The return must clearly be tempered in relation to the risk.

Mr. Michael Jopling (Westmorland and Lonsdale)

Is my right hon. Friend aware that the compensation terms that he has announced today are warmly welcomed? However, will he reflect that a basic problem of the case was that many decent but often inexperienced people felt, rightly or wrongly, that the Government had endorsed the probity of the company? What has he done and what does he intend to do to ensure that such a false impression is not given again?

Mr. Ridley

I am grateful to my right hon. Friend for his comments. He will know that since then the House has passed the Financial Services Act 1986 which puts the responsibility for regulating such matters on the Securities and Investments Board, which has its own clearly delineated and contained compensation fund. In future, the SIB will be responsible for regulation. That is a much healthier state of affairs than the old one under which those events took place which, I am glad to say, no longer applies.

Mr. D. N. Campbell-Savours (Workington)

In so far as the ombudsman identified five grounds of significant maladministration by departmental officials and a great number of people have lost money on the licensed securities market, will the right hon. Gentleman now institute an inquiry within the Department on what happened to investors in Harvard Securities, Afcor Investments, Investors Discount Brokerage and Tudorbury Securities—whose activities were repeatedly drawn to the attention of departmental officials, and which have left great numbers of people with worthless investments?

Mr. Ridley

I do not believe that I should follow the hon. Gentleman into discussing other cases that are not the subject of the statement.

Mr. Kenneth Warren (Hastings and Rye)

When did my right hon. Friend first hear about the problems of Barlow Clowes, and was he informed earlier by any other Department of State?

Mr. Ridley

I heard of the problems of Barlow Clowes at the time of the collapse. Of course, I was not in the Department of Trade and Industry then. Since I have been in that Department, I have been all too well aware of the problems of Barlow Clowes and have heard little else since July.

Several Hon. Members


Mr. Speaker

Order. The House knows that there is another statement after this one and a very important debate. I shall allow three more questions from either side and then I regret that we shall have to move on. However, there will be opportunities for right hon. and hon. Members to discuss the matter on the Adjournment motion tomorrow.

Mr. Peter Hardy (Wentworth)

In answer to my hon. Friend the Member for Workington (Mr. Campbell-Savours), the Secretary of State said that the Government are not at fault and do not have the responsibility for investors in Barlow Clowes. Yet the Government took exactly the same approach to those affected by the collapse of McDonald Wheeler, which purported to have the blessing of the Government. If the Government can pay generous compensation for those sadly hurt by the collapse of Barlow Clowes, how can they justify their refusal to pay compensation to those affected by the collapse of McDonald Wheeler?

Mr. Ridley

The hon. Gentleman is already trying to widen my announcement and to make a precedent in a way that the Government had not intended. I must slightly correct his introductory remarks. I said that the Goverment were not legally liable for the collapse of Barlow Clowes, but I did not say that the Government were not at fault. If the hon. Gentleman reads my statement and the observations on the report, he will realise that that was not an accurate shorthand for what I said. For three reasons, there were some blemishes in the Department's handling of the case. There was a legislative vacuum in the sense that the Financial Services Act was not in place, and there was the hardship caused to many poor investors. We responded as I believe the House would wish us to respond to the suggestion of the Parliamentary Commissioner for Administration that compensation should be paid. That is the important point. It is wrong for the House to try to open up other cases in which the circumstances are, no doubt, wholly different.

Sir Peter Hordern (Horsham)

My right hon. Friend has reached a most honourable settlement, which is entirely characteristic of him. My right hon. Friend mentioned earlier that the Financial Services Act 1986 and the Securities and Investments Board, whiich is now in place, should prevent further such frauds. However, will he reflect that in September 1985 the financial services division of his Department asked the solicitors office for advice? That advice took two months to come, even in an interim form, and three months to come in a definitive form, and it was six months before counsel's opinion was even invited. Does my right hon. Friend agree that lawyers, although not apt to be very speedy, have in this case excelled themselves in their tardiness and that the delay has proved to be very expensive?

Mr. Ridley

I am grateful for my hon. Friend's comments. However, I must riposte by saying that the Government have a collective responsibility for the decision that I have announced today, just as I share the collective responsibility for the decision that was taken at the time of the Le Quesne report that the Government were not liable and should not pay compensation. I must point out that the Parliamentary Commissioner did not find the particular event in the history of this unhappy matter to which my hon. Friend referred to be of great significance.

The event on which the ombudsman based the bulk of his claim that compensation should be paid was the fact that the officers of the Department failed to notice that the Jersey partnership had different partners from those of the United Kingdom partnership. It may or may not have been as a result of the failure to make that observation that further losses were suffered by investors. That is the point on which the claim of maladministration was mainly based and it will be for the House to decide whether it believes that that was the correct judgment.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Is the Secretary of State aware that I am still concerned about the timetable of payments to my many constituents who were affected? I also have constituents who are still waiting well beyond the deadline for money from the investors' compensation scheme from the Greenan collapse. Will the Secretary of State ensure that extra staff are taken on, if necessary, to ensure that timely applications are paid out by the end of February and will he give us an absolute guarantee on that?

In view of the crucial and harmful role in this disaster that was played by the Jersey partnership, will the Secretary of State and the Home Secretary now examine seriously the role of the offshore islands in this financial area?

Mr. Ridley

On the latter point, I advise the hon. Gentleman to read the document carefully. There was a complicated series of events, and there is no possibility of banning offshore islands. Islands are there and always will be, so the hon. Gentleman's suggestion is impractical. On timing, I must make it clear again that when investors or their estates receive the form, they should make a claim within 28 days of receiving that document. If, for some reason, they do not make that claim, there are arrangements for late payments to be made, but it will be for investors to make the application. I hope that all right hon. and hon. Members will encourage their constituents to send in the claim as early as possible so that they can receive the compensation as early as possible.

Mr. Peter Viggers (Gosport)

Does my right hon. Friend agree that there can be no question of the Government's being primarily responsible to the investors in this affair? Bearing in mind the fact that it would be difficult or even impossible for many investors to prove any Government liability, and bearing in mind the costs of any legal claim, does my right hon. Friend agree that the Government's offer should be seen as generous—or even very generous—and should be welcomed accordingly?

Mr. Ridley

Everything that my hon. Friend says is correct. This is a very generous offer, which follows what the Parliamentary Commissioner suggested, and the main reason why we are making it is that we have respect for the Parliamentary Commissioner's office.

Mr. Win Griffiths (Bridgend)

Although we recognise the generosity of the Government to all those who needlessly lost money in the Barlow Clowes affair, my constituents will be wondering why it has taken all this time for the Government finally to give compensation. Until the publication of the ombudsman's report, all the signs were that the Government were extremely loth to get involved. As a result, they have caused those who lost money needless suffering. In my constituency, one couple had to sell their home because it seemed to them that they had no prospect of being compensated, and the husband has since died because of the stress of the Barlow Clowes collapse. If the Government had acted immediately on information that was widely available, the damaging impact of the affair could have been avoided.

Mr. Ridley

The hon. Gentleman has heard what I said. We received the Parliamentary Commissioner's report only a short while ago. It has been considered by the Department and finalised by the Parliamentary Commissioner in almost record time, I believe, to get the news out as quickly as possible. I really do not think that we have dragged our feet. It took the PCA a considerable time to conduct his investigation but he must be responsible for that, not me. I must make it clear that we are paying compensation in the special circumstances of this case only because of the recommendation of the Parliamentary Commissioner.

Mrs. Elizabeth Peacock (Batley and Spen)

Although I thank my right hon. Friend for his statement, may I ask him to accept that many investors in my constituency—some of them elderly and some who were first-time investor—took advice from professionals? Will he try to ensure that such a tragedy does not occur again because such people are very vulnerable to the information and advice that they are given?

Mr. Ridley

I shall certainly draw my hon. Friend's point to the attention of the Securities and Investment Board, whose job it is to ensure that intermediaries behave in an entirely responsible way towards innocent investors who do not quite know the risks.