HL Deb 17 November 2003 vol 654 cc1773-4

3 p.m.

Lord Newby asked Her Majesty's Government:

Whether they support the Financial Services Authority's proposals to regulate the with-profits funds of mutual life offices.

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)

My Lords, the Government support the work of the Financial Services Authority as the independent body that regulates the financial services industry in the United Kingdom. The FSA published a discussion paper in February of this year on the issues for with-profits business arising from the Sandier review. Responses were requested by 16th May. The FSA has not yet published its consultation paper on these issues and so it is not possible for me to comment further.

Lord Newby

My Lords, is the Minister aware that the FSA proposals appear designed exclusively for companies—plcs—not mutuals, and if carried into effect would have the effect of ending mutuality in the long-term savings industry? Therefore, will the Treasury ensure that revised proposals are made which will enable the financial services mutuals to continue to provide a very valuable alternative range of savings products?

Lord McIntosh of Haringey

My Lords, I should preface any further comment by saying that this is of course a matter for the regulator. I am aware of the concerns to which the noble Lord, Lord Newby, refers. They have been expressed to the FSA. The consultation paper that I mentioned will be published after the FSA board meeting on the 20th of this month. It is my understanding that the mutuals will be asked to set out what they are doing to achieve the Sandier objectives of transparency, with which I am sure the noble Lord, Lord Newby, agrees. It is recognised that the problem for mutuals, which have only a single fund, is different from that for other insurance companies.