29 November 2010
More than 80 MPs joined in Harriett's historic Backbench Committee debate in the House of Commons. Harriett Baldwin (West Worcestershire) (Con): All I can say is "Wow," when I see how many colleagues and Opposition Members have shown up this evening to take part in this historic debate. I believe this is the first time in this Chamber that the Financial Services Authority, which was set up by the former Prime Minister as the independent statutory regulator, has been subject to such parliamentary scrutiny. In fact, I believe that we are today showing that we can, and do, take a real interest in what the independent statutory regulator is doing. The Chairman of the Treasury Committee pointed out how many Members are in the Chamber this evening for a Back-Bench business debate, when we are not obliged to be here by anyone other than the constituents who have contacted us with their concerns. Alun Cairns: I support what my hon. Friend said about the number of Members present this evening, which is unusual, as she pointed out. The indication so far is that this is a cross-party issue and that party politics is not playing a part in it. The comments from the Opposition Benches support the comments made in the debate. Harriett Baldwin: I entirely agree. We have learned in the past few years how important good financial regulation is. Imagine the outrage there would be in the Chamber if a Minister said from the Dispatch Box, "I am going to put between 20% and 30% of an industry out of business at the stroke of my pen on 1 January 2013"? It is unbelievable that we have allowed an organisation to grow and, unscrutinised by this legislative body, have such a power over our constituents' lives. Mr Andrew Turner (Isle of Wight) (Con): Does not my constituent, Mike Ward of Ward Financial Services, have a point when he says: "People need to understand that business has changed in recent years. People won't trust banks as much as they did in the past, so they must be careful not to undermine the relationship between themselves and their clients. That would not be the right way forward"? Harriett Baldwin: I thank my hon. Friend for that intervention. It is the banks that are likely to be advantaged by the change in regulations. I am afraid I have only six minutes in which to raise the many questions that I have about the regulation. I shall focus on a couple of areas that my hon. Friend the Member for Wyre Forest (Mark Garnier) did not touch on much in his remarks, which were extremely comprehensive. I want to hear more about the handing of a competitive advantage to the banks. It is my understanding from my discussion with the Financial Services Authority that banks that are trading overseas could come into this country and continue to offer advice. The European Union is about to consult on something called the directive for packaged retail investment products. It would be wise for the FSA to wait and see the results of the consultation before it takes permanent steps here to put out of business 20% of the independent financial advisers. I have also heard through the Westminster Hall debate that my hon. Friend the Minister has talked about the free annual financial health check that the Consumer Financial Education Body will be able to offer. I want to hear more tonight from the Minister about how that will be delivered and what the additional cost to the industry through the social responsibility levy will be. Has that additional cost to the industry been factored into the £1.7 billion that is the five-year cost of the retail distribution review? For the remaining four minutes at my disposal, I shall focus on my main area of concern, which has been raised by colleagues-the question of the qualifications. Imagine if nurses who were qualified were suddenly told that from now on, nursing was to be a degree-level qualification, and that all existing nurses would have to pass that degree-level qualification or they would not be able to practise their profession. That is what is happening to our independent financial advisers. If I thought that passing an exam would prevent mis-selling and we would never have another incidence of mis-selling in future, I would be more supportive of the idea, but I do not see that an ability to pass an exam, which someone in their 20s might be much better at-certainly, I was-than by the time they get into their 50s and 60s, when they have all that experience about financial advice, precludes mis-selling in the future. I can offer a few examples. We have been inundated with correspondence on the issue, but a couple of important examples stand out. One adviser wrote to me who is already qualified to chartered financial planner status. He is an associate of the Chartered Insurance Institute, which maps across to a degree-level qualification, but with the FSA's new standards, it appears that there will be gaps. If advisers with such a qualification do not fill those gaps in the two years available, they will no longer have a livelihood in the industry. That is blatantly retrospective regulation. Another important example that was brought to my attention was a letter from the chief executive of a friendly society based in Cleveland on Teesside. The case may be raised in the debate; I hope so. The chief executive wrote to me explaining that his door-to-door sales force who sell funeral policies for £1 a week and life policies for up to £5 a week will now be required to take the degree-level qualification. As such, he felt that his friendly society with its 10,000 low income customers would have to shut it doors. May I urge the Minister to try to influence the independent statutory regulator to be more respectful of experience as a qualification? Mr Russell Brown (Dumfries and Galloway) (Lab): Does the hon. Lady agree with this statement: it is one thing to impose new rules on new entrants to the IFA profession; it is quite another thing to disqualify someone who is already qualified? Harriett Baldwin: Indeed. I understand that there is to be an alternative based assessment. The Minister mentioned it in the Westminster Hall debate, but I want to try to make sure that he works closely with the FSA to publicise that route more extensively, and that he works with the FSA perhaps to soften the cliff-edge of disqualification on 1 January 2013. We all want to see better qualified financial advisers, no question about it, but to close the door on financial advisers practising their profession on 1 January 2013 is not on. In conclusion, financial advisers face a triple whammy. We have heard about some of the other issues, but the one that we would all see as being the most illogical is the one about qualifications. As the Government go through the process of changing the way the FSA operates, I urge my hon. Friend the Minister to change the way the FSA regulates the sector. 8.26 pm | Hansard