HC Deb 19 July 1989 vol 157 cc331-2
7. Mr. Geoffrey Robinson

To ask the Chancellor of the Duchy of Lancaster what representations he has received on the regulation of financial services.

Mr. Maude

I receive many representations on a variety of topics relating to the regulation of financial services. We carefully consider those which relate to the scope of the framework of the regulatory system, or the powers under the Financial Services Act 1986 which the Government retain. Those which relate to matters that are the responsibility of the Securities and Investments Board or of another regulatory authority are passed to the appropriate body.

Mr. Robinson

Does the Minister agree that there is enormous disquiet in the country, in the House and in the City in particular about the County NatWest-Blue Arrow-Manpower affair? Does he agree that when the public pays for a report it is entitled to see it? Is he aware that the reluctance of his Department to publish reports gives the impression that it is trying to operate a secret society instead of a major Department of State? Will he give an unequivocal undertaking to the House to publish the inspectors' report on the County NatWest-Blue Arrow-Manpower affair so that we may raise it, as appropriate, in the House before the recess?

Mr. Maude

We shall certainly publish the report as soon as we possibly can.

Mr. Maxwell-Hyslop

Is my hon. Friend monitoring the extent to which the Financial Services Act, which was designed to protect the consumer, is in fact resulting in the rapid disappearance of independent financial advisers and intermediaries who are rapidly being sucked into being paid agents of given products? Will this not leave the public bereft of the protection of independent advice under the guise of protecting their interests?

Mr. Maude

I hope that it will not have that effect. I regard the existence of independent financial advisers who can give unbiased advice about which financial products customers should purchase as quite important. At the same time, it is important that people who hold themselves up as being competent to provide such advice should in fact be competent to do so. The operation of the Financial Services Act in the past 15 months has led to the withdrawal of some applicants to join FIMBRA, the regulatory body for intermediaries. Many of those were withdrawn because the applicants had stated on the application form things that were untrue. It is desirable that people who indulge in such behaviour should be prevented from offering their services to the public.

Mr. John Garrett

Will the Minister enlarge somewhat on his reply to my hon. Friend the Member for Coventry, North-West (Mr. Robinson)? Will he confirm that the Secretary of State has received the inspector's report on the Blue Arrow Manpower takeover involving County NatWest and some other leading institutions? Does he propose to publish it before the recess, or does he propose to stifle discussion on the matter?

Mr. Maude

It is difficult to discuss the matter until it is published. I can confirm, as I think the hon. Gentleman already knows, that we have received the report and that we shall publish it as soon as it is proper to do so.

Mr. Beith

Is the Minister able to give an assurance that, under the terms of the Companies Bill, clients of insurance brokers will be as fully protected as all other clients of financial advisers?

Mr. Maude

I am not sure what the hon. Gentleman is getting at. There is no reason to suppose that what he suggests should not be the case.

Mr. McCrindle

My hon. Friend has mentioned the comparative success of the Financial Services Act 1986. Notwithstanding its many critics, does he agree that it is surprising that the one financial transaction that is undertaken by most of us at one time or another, which is perhaps the most important in a lifetime—obtaining a mortgage—is outside the ambit of the Financial Services Act 1986? Why does the Minister not give some consideration to future legislative change to embrace that within its sphere?

Mr. Maude

The lending of money is governed by the Consumer Credit Act 1974. The Financial Services Act 1986 was framed to regulate the provision of investment services and is designed to require all those who conduct investment business to be authorised. The borrowing of money on a mortgage is not an investment. Buying a house may be an investment, but borrowing the money is not. They are two different regimes, and it is proper that they should be. I see no reason to change that.