HC Deb 27 October 1994 vol 248 cc997-9
8. Mr. Vaz

To ask the Chancellor of the Exchequer if he will make a statement on Government proposals for compensation for the victims of BCCI.

The Minister of State, Treasury (Mr. Anthony Nelson)

While we sympathise with the plight of BCCI depositors, responsibility for their losses rests with those who committed the frauds, not with the Government. Parliament established the statutory deposit protection scheme to protect those with small deposits and to date more than 17,800 payments have been made to BCCI depositors, totalling more than £76 million.

Mr. Vaz

Will the Minister join me in welcoming the new settlement agreement which has been reached between the creditors committee and the sheikh of Abu Dhabi? What necessary steps will the Government take to ensure that those payments are made immediately, bearing in mind the fact that the Government have done absolutely nothing to support the depositors and creditors of BCCI during the past two and a half years?

Mr. Nelson

While I vehemently reject the last part of the hon. Gentleman's question, I should like to pay a more generous tribute to the hon. Gentleman, who has shown much interest and concern for depositors who have lost out through the collapse of BCCI.

The factual position is that the $1.8 billion package for the creditors has been the result of negotiations between the liquidators and the majority shareholders, and should enable depositors to win back something like 30 to 40 per cent. of their funds. It will be necessary for the creditors committees in the UK, the Cayman Islands and Luxembourg to agree on that. I believe that that has now been agreed, and the only remaining hurdle is for the courts in those three jurisdictions to agree to it. I very much hope that when that is done, the way will be cleared with expedition to pay some recompense to those who have lost out.

Mr. John Greenway

Will my hon. Friend take this opportunity, notwithstanding the claims of some of the BCCI depositors for possible compensation, to reassure the House and the country that investors who take unnecessary risks with their money should not expect to be compensated by those who are prudent in their investments?

Mr. Nelson

I strongly believe that my hon. Friend makes a pertinent point, both with regard to depositor protection and with regard to investor protection. Not just as a result of directives from the European Union on both issues, but as a result of legislation introduced by this Government on both issues, we have substantial protection schemes to protect depositors and investors. At the end of the day, however, there must be a responsibility—a caveat emptor—on those who place their funds to take some responsibility for the husbandry of their financial affairs.

Mr. Darling

Do the Government accept that the bank claims and the pension transfer claims arise from the same problem, which is that the regulatory regime in this country does not work? In the light of that, why did the Minister claim earlier this week that the financial services regulatory system was working well? Is he surprised that no one has any confidence in the Government's ability to make the regulatory regime work?

Mr. Nelson

I do not for a moment accept the hon. Gentleman's premise. The fact is that with regard to opt-outs and transfers of personal pensions, it is as a result of the investigations and inquiries, and the process of redress that has been put into place, that people who have been disadvantaged will have it made good. That is the result of an incisive, deliberate and determined approach of supervision and regulation which is proving its worth. It is serving the interests both of investors and of depositors. This week's announcement by the Securities and Investments Board is a good example of that.