Personal Pensions (Misselling) (Hansard, 24 June 1997)

§ Mrs. Liddell

On 14 May I spoke to senior representatives of the 24 firms which are together responsible for nearly three-quarters of the cases requiring review under the terms of the guidance issued by the Securities and Investments Board (SIB). I told them of the Government's concern about the delays in completing these case reviews and challenged them to perform to better standards than those expected in the targets set by SIB and the Personal Investment Authority (PIA) for each firm. I also made clear that, in the public interest, I plan to publish regular information about each firm's progress.

I am placing copies of my letters to these firms in the Library of the House. In them I asked for information about their strategies for case reviews and for monthly information about progress with cases. In the letters, I set out my intention to publish the information provided, firm by firm, in the spirit of open government, and in the interests of the investors and the investing public generally. I now have replies from all 24 firms. I am placing copies in the Library of the House and making them available to the press.

Most of these replies suggest a willingness to deliver the targets for completion of case reviews set by the regulators. A number of companies claim to have adopted practices which will hasten the conclusion of case reviews. These include providing additional staff, placing responsibility with a director and outsourcing expertise where there are resource constraints. I regret that some firms place more emphasis on the impediments to progress such as information flows and the scarcity of appropriate expertise. It is important that case reviews are treated as a matter of priority so that investors can be reassured that their pensions are secure.

There are also some indications that firms are adopting, or considering, accelerated case management techniques which will improve the speed of case handling without prejudicing investors' rights. Such methods include waiving consideration of whether sales procedures were strictly at fault; use of automatic formulae to top up certain smaller cases; and potentially guarantees which will ensure that investors will either get reinstatement into occupational schemes or equivalent treatment where that proves impossible. I shall be looking for evidence that 457W firms are showing their sincerity and commitment to customer service while moving quickly to adopt such streamlined procedures.

While most of the policy statements sent to me showed a businesslike sense of purpose, I regret that there are two which appear to misunderstand the Government's determination that this matter must be resolved with dispatch. The Sedgwick Group is quite wrong to assert that the Government's initiative on 14 May was in any way under-researched. And I am not convinced by the objections of the board of Legal and General to well merited criticisms of the industry's performance so far.

When I met these firms on 14 May I made clear that, in the public interest, I would review progress each month and publish information monthly about the progress being made by each firm toward delivery of the regulators' targets. Some firms have already demonstrated that the pace of their reviews is quickening. I trust that this trend will accelerate over the months to come. But progress must not be made through shortcuts achieved to the detriment of investors' rights. Any attempt of this nature will quickly be picked up by the quality control process which the regulators will carry out at my request.

When I review the progress made by each of the 24 firms each month, I will consider what further action may be called for if I am not convinced of their good intentions. I wish the first reports to be available to me by 3 July, and each month thereafter. It is now urgent that the pensions industry honours its commitments and puts its house in order. Only in that way can it assure its customers, and indeed the general public, of its ability to look after their interests responsibly.