HC Deb 12 March 1998 vol 308 cc315-7W
Mr. Timms

To ask the Chancellor of the Exchequer what progress has been made towards resolving cases of personal pensions mis-selling; and what further action will be taken to see that all those missold a personal pension receive redress. [34007]

Mrs. Liddell

I have today placed in the Library a table showing what further progress has been made in the period up to 28 February 1998 by the 41 firms the Government have been monitoring.

Continuing the trend established in recent months, the table shows that the firms have made further progress during the month, and that about 65 per cent. of the cases identified for review are now completed.

The general trend hides a wide range of different performances. A few firms—8 in all—have yet to complete even half their cases. One is still some way short of the 10 per cent. mark. At the other end of the scale seven of the 41 firms I am monitoring have now completed over three quarters of their cases identified for review.

In previous announcements, I have underlined the importance that both the Government and the regulators attach to all firms, including small firms, taking all possible steps to complete their reviews. I have also made it clear that firms will not escape sanction if they fail to act. That was not an empty threat. Two days ago, the Personal Investment Authority (PIA) announced it was investigating apparent failures to meet the regulator's targets for completing the most urgent case reviews in respect of about 600 small firms, with a view to taking disciplinary action. The firms concerned should have completed at least 90 per cent. of the top priority cases—which include people who are already retired or have died—by the end of December 1997. Far too many small firms appear to have failed to tackle even these most pressing cases. This is simply not acceptable, and PIA's action is to be commended.

As noted above, a number of large firms have resolved over three quarters of their cases. Some of these firms are now getting close to the point where they will have completed their priority cases. This is welcome news. However it highlights the importance of looking forward beyond the first phase of the review of pensions mis-selling. The first step has rightly been to address the more pressing categories of cases, for example the cases of those who are most likely to have lost out and those either in or close to retirement. But they are not the only victims of pensions mis-selling and it is now important to look ahead at how to address the less pressing cases, which have in the past been referred to as "non-priority" cases.

The regulators—Financial Services Authority (FSA) and the PIA—have today issued a consultation document setting out proposals for taking forward the review of personal pensions mis-selling into its second phase. Copies have been placed in the Library. The Government welcome this step forward, which reflects the outcome of research on the extent of the problem.

The document sets out the regulators' proposed approach for firms to tackle the second phase of the review, building on experience of the first phase. It is important to note that this policy is not yet finalised. The way forward must be practicable. It must work. That is why the regulators have chosen to consult.

This is particularly important given that initial research commissioned by the FSA suggests that it will be a large task—potentially involving as many as 1.8 million cases. Whatever the final figures turn out to be, it is clear that the scale is such that it is in everyone's interests that the process adopted is the right one. To that end I urge everyone that is involved or has an interest to participate in the consultation—including investors, occupational pension schemes and of course the firms themselves. In doing that I hope that everyone will make constructive contributions. That is the only way to see that the final policy that the regulators adopt is the best way forward, in the interests of investors and ultimately in the interests of the industry.

Progress by pensions firms in completing reviews of personal pensions mis-selling in the period to the end of February 1998
A B C D E F G H
Under 25% of cases resolved
DBS 2506 37 199 64 135 72 3 7
25–50% of cases resolved Gan
Gan 11,111 802 3,719 482 3,237 2,328 21 33
Lincoln National 13,239 1,358 4,148 1,015 3,133 2,164 16 34
Financial Options 339 100 32 18 14 11 3 38
Burns Anderson 1,035 247 164 96 68 53 5 38
Countrywide 4,684 1,594 252 159 93 74 2 39
Windsor Life 9,451 2,559 1,706 264 1,442 1,179 12 42
Abbey Life 17,251 4,107 6,288 889 5,399 3,272 19 48
50–75% of cases resolved
Friends Provident 6,831 932 2,791 418 2,373 2,069 30 50
Canada Life 5,498 280 2,961 520 2,441 1,953 36 50
Standard Life 6,899 593 3,028 967 2,061 1,898 28 50
Colonial 8,167 2,118 2,832 339 2,493 1,737 21 51
CIS 42,536 3,402 20,969 12,683 8,286 6,355 15 53
London and Manchester 8,182 1,045 3,802 483 3,319 2,875 35 54
Royal & Sun Alliance 15,672 2,146 7,399 906 6,493 5,513 35 55
Hill Samuel 5,987 760 2,894 586 2,308 1,962 33 55
IFA Network 251 40 104 75 29 26 10 56
Sun Life of Canada 26,660 7,046 9,546 1,836 7,710 6,312 24 57
Britannic 18,722 4,413 9,664 2,547 7,117 3,824 20 58
United Assurance 12,793 900 7,879 1,855 6,024 4,810 38 59
NatWest 14,450 3,988 5,743 981 4,762 3,646 25 60
Allied Dunbar 18,689 3,139 9,677 3,005 6,672 5,195 28 61
Albany Life 2,913 567 1,662 148 1,514 1,169 40 65
Godwins 1,478 100 941 355 586 507 34 65
Equitable Life 7,303 1,563 3,482 1,422 2,060 1,806 25 66
Guardian 8,884 1,097 5,738 882 4,856 4,075 46 68
Commercial Union 7,678 1,192 4,705 751 3,954 3,434 45 70
Sedgwick 15,487 7,702 3,456 1,322 2,134 1,904 12 71
Berkeley Independent 126 73 17 14 3 2 2 71
Lloyd's TSB 48,853 10,100 27,292 5,952 21,340 18,503 38 71
Legal & General 36,480 14,441 14,856 1,537 13,319 10,504 29 73
M&E Network 290 159 58 22 36 31 11 73
Royal London 12,075 1,082 8,891 1,369 7,522 6,439 53 74
Norwich Union 7,344 2,189 3,702 661 3,041 2,633 36 75
Over 75% of cases resolved
Pearl 45,927 3,080 37,302 5,557 31,745 26,562 58 77
Wesleyan 4,156 247 3,164 918 2,246 2,031 49 77
Prudential 72,580 18,970 50,412 3,779 46,633 35,884 49 81
Midland 4,828 384 3,956 570 3,386 3,033 63 83
AXA Equity and Law 3,925 718 2,736 617 2,119 1,950 50 84
Hogg Robinson 2,039 795 1,018 357 661 556 27 84
Barclays 16,924 6,147 8,985 2,091 6,894 5,942 35 84

A: cases identified as requiring review.

B: of A, cases where investor was informed that information gained during assessment excluded cases from review.

C: number of assessments completed.

D: cases where the investor has been informed that no redress is due.

E: cases where redress has been offered.

F: cases where redress has been accepted.

G: cases where redress has been accepted as a percentage of cases identified for review ((F/Ax 100).

H: cases completed, including exclusions, as a percentage of cases identified for review (((B+D+F)/A)x 100).