§ 8. Dr. Vincent Cable (Twickenham)What assessment he has made of the performance of the Financial Services Authority in protecting consumers from financial mis-selling. [60344]
§ The Paymaster General (Dawn Primarolo)The Financial Services Authority has statutory objectives to secure appropriate consumer protection, taking account of the costs and benefits of regulation, and to promote public understanding of the financial system. The FSA reviews its performance in its annual report, which will be laid before Parliament later today.
§ Dr. CableWill the Minister explain the difference between the commission-driven mis-selling of millions of pensions, which led Treasury Ministers to name and shame the worst offenders, and the commission-driven mis-selling of millions of endowments, as a result of which many of our constituents have not been able to repay their mortgages, but the FSA, backed by the Government, is refusing to name the worst offenders?
§ Dawn PrimaroloIn some 80 per cent. of cases in which pensions were mis-sold, it was as a direct result of advisers. There are far fewer such instances in cases of mis-selling of endowment mortgages, and the compensation required is smaller. Of course, the FSA is active in ensuring that people with mortgage endowments know where they stand and how to complain. It is requiring firms to resolve areas of significant consumer detriment, and pockets of mis-selling and mis-pricing of products are being investigated. Some 218,000 policies have already been investigated, and compensation has been made available.
§ Mr. Mark Lazarowicz (Edinburgh, North and Leith)My hon. Friend will be aware of the scandals involving split-capital investment trusts. One of my constituents tells me that she has lost 96 per cent. of the value of her investment with the Aberdeen investment trust, which is part of the Aberdeen asset management group. She made that investment believing that it was low risk, and it was intended to pay for her elderly mother's nursing home fees. Will my hon. Friend urge the FSA as soon as possible to complete its investigation into the split-capital investment trusts scandal? Will she also join me in urging the Aberdeen asset management group to compensate my constituent and the many thousands of people up and down the country who have similarly lost as a result of the mis-selling of investments?
§ Dawn PrimaroloI understand the seriousness of the position that my hon. Friend illustrated with his constituent's experience of split-capital investment trusts. Although the FSA does not directly regulate that area, it has been investigating such trusts since last year. It will 402 look particularly at marketing material, collusion between managers of split funds and mis-selling by advisers. As for my hon. Friend's constituent, of course she must take up her complaint with the firm. When firms cannot resolve complaints themselves, those complaints can be referred to the Financial Ombudsman Service. However, the FSA is pressing ahead with that review as quickly as possible.