§ 3. Mr. Nigel Beard (Bexleyheath and Crayford) (Lab)If he will make a statement on progress towards implementing the recommendations of the Myners and Sandler reports. [151544]
§ The Financial Secretary to the Treasury (Ruth Kelly)The Government are currently reviewing the progress that the occupational pension industry has made in implementing the recommendations of the Myners report. We are continuing to implement the recommendations that Ron Sandler proposed.
§ Mr. BeardI thank my hon. Friend for that reply. I recognise the Government's policy to encourage saving, and both the Myners and the Sandler reports contained proposals for reducing obstacles to saving and making it easier. Cash individual savings accounts have proved to be very popular, especially with low-income savers who are reluctant to part company with their savings in case of emergencies. Why, therefore, does the pre-Budget report reduce the annual ceiling on ISAs from £3,000 to £1,000? Is that not inconsistent with general policy?
§ Ruth KellyI am glad that my hon. Friend draws attention to the success that ISAs have been, both in widening access and in encouraging low-income groups to hold savings in that form. I can confirm to him, however, that the Government announce in the pre-Budget report that we intend to review the treatment of ISAs so that all Sandler's stakeholder medium-term products and life insurance products will be brought into the stocks and shares component of ISAs from 2005. My hon. Friend makes a representation on the limits, and of course my right hon. Friend the Chancellor will have heard what he says and I am sure will reflect on it.
§ Angela Eagle (Wallasey) (Lab)Will my hon. Friend reflect on the recent evidence by both Myners and Sandler to the Treasury Select Committee about the current structure of the financial services industry? They 373 both characterised it as having excessively weak consumer power, because of the lack of transparency in the products and the fact that there are too many complex products, so that it is almost impossible for anyone to discern any meaning from the information about them. Moreover, those who make the products are far too concerned about distribution mechanisms and sales, and therefore leave consumers no power. That is a form of market failure. Will my hon. Friend look at that and see what the Treasury could do to restructure the market, in order to make it much simpler and easier for people to put their money into some of those products and make the products more trustworthy?
§ Ruth KellyMy hon. Friend makes an extremely important point. We asked Ron Sandler to look at the structure of the retail savings industry to see how it could be made more efficient and transparent. He concluded that the current structure of the market was far too opaque and complex for consumers to be properly served. That is why we are now working with the Financial Services Authority to introduce the suite of Sandler stakeholder products, which would shift the burden away from the sales process and protect the consumer by building that protection into the product itself. I believe that the consumer will be much better served once those products are introduced.