§ 2.40 p.m.
§ Brought from the Commons; read a first time.
§ Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 12th March):
§ Lord Brabazon of Tara
My Lords, I beg to move that this Bill be now read a second time.
The Government set out their proposals for new legislation on the friendly societies in the Green Paper published in January 1990. Since then, there has been extensive consultation with the friendly societies, representatives of the actuarial and accountancy professions and other interested parties throughout all stages of preparation of the Bill. We are grateful to all those who took part in the consultation exercise. As it now stands, the Bill reflects the comments received from a wide range of organisations and individuals. It has the full support of the friendly societies movement and, I believe and hope, of noble Lords on all sides of your Lordships' House.
Friendly societies have been recognised in statute for nearly 200 years, though their origins are even older. They have played a valuable role in making mutual provision for their members and their relatives against loss of income through sickness or unemployment and for retirement. In recent years, however, societies have found it increasingly difficult to compete with insurance companies and others because of the restrictions on their activities imposed by the legislation, much of which dates back to the last century.
The Bill offers friendly societies a new lease of life. In the first place, it will allow them to incorporate and so establish or acquire subsidiaries thereby providing a wider range of services to their members and to the public. The new activities which they will be able to conduct through subsidiaries are set out in Schedule 7 to the Bill. They include establishing and managing unit trust schemes and PEPs; arranging for the provision of credit; carrying on long-term or general 1618 insurance business; providing insurance intermediary services; and administering estates and executing trusts of wills.
The second major element of the Bill is the establishment of a regulatory framework in line with the best current standards. A new commission will supervise the activities of friendly societies, promote their financial stability and protect members' funds. All friendly societies carrying on insurance or non-insurance business will require authorisation by the commission.
The Bill also sets out criteria of prudent management with which all friendly societies will have to comply. The commission will be able to exercise a range of prudential powers if it considers that a society is failing to comply with the criteria or that action is required to protect the interests of the members of a society for some other reason. Friendly societies will be brought within the scope of the Policyholders Protection Act 1975, the statutory protection scheme covering insurance policyholders.
The Bill is a much needed piece of legislation which will allow friendly societies to compete in the modern financial world while providing them with an effective supervisory framework. Although the timing of the election has curtailed the time we have to debate the measures, as I indicated earlier there has already been extensive consultation with interested parties. The detailed provisions of the Bill are closely modelled on recent legislation dealing with companies, banks and building societies. They are in no way novel or controversial. I know that the friendly societies are fully behind the Bill. I am confident that it also enjoys widespread support on both sides of your Lordships' House. I commend the Bill to your Lordships.
Moved, That the Bill be now read a second time.—(Lord Brabazon of Tara.)
§ 2.43 p.m.
§ Lord Peston
My Lords, I thank the Minister for introducing the Bill which, as he rightly said, is much needed. In my last speech of this Parliament, it is a great pleasure to give my full support to the legislation. As the Minister said, it is not controversial and it brings the law up to date. One has a sense of history because the Bill is amending and repealing parts of legislation which go back 150 years.
As regards the activities listed in Schedule 2—and I refer to one not mentioned by the Minister—I noted especially that "long term business" can include,Effecting and carrying out tontines".Those of us who are devoted to detective and murder stories are delighted to know that tontines will still persist as the basis for potential plots of such stories in the future.
Friendly societies are very useful bodies. They are very much in the tradition of our country. They arose in connection with prudential management of one's own affairs and self-help. I am delighted that we now have some legislation which, as the noble Lord rightly said, is supported by both the friendly society movement and your Lordships' House. I am delighted that we are introducing legislation that, I hope, will 1619 enable the friendly societies to survive for yet another century and a half. It gives me great pleasure to support the legislation.
§ 2.45 p.m.
§ Lord Mayhew
My Lords, I must begin by declaring a tangential interest in the Bill as chairman of the Liverpool Victoria Friendly Society's staff-pensioners' trustee companies. My noble friends and I warmly support the Bill. My modest experience of friendly societies has helped me to understand their fine history and the tremendous help that they have given for nearly two centuries to millions of the least invulnerable of our citizens.
The Bill has taken a long time coming, but it is a long and complicated Bill. Moreover, as the Minister said, part of the reason for its long gestation has been the close and fruitful collaboration between the Government, the friendly societies and the other interested parties. That has made the societies extremely enthusiastic about the Bill. We on these Benches are glad to give it our warm support.
§ 2.46 p.m.
§ Lord Brabazon of Tara
My Lords, I am grateful to both noble Lords for their kind reception of this useful Bill. I commend the Bill to the House.
On Question, Bill read a second time; Committee negatived. Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 12th March), Bill read a third time, and passed.