Regulation of Financial Services (Land Transactions) Bill

I beg to move, That the Bill be now read a Third time. The aim of the Bill, as I am sure hon. Members already know, is to extend the full protection of Financial Services Authority regulation to consumers purchasing home reversion plans and ijara sharia-compliant home finance products. That will help people to make informed choices about what may be the most significant financial decision that they make and ensure that there is a level regulatory playing field in the equity release market, much of which already falls within the FSA’s remit. I am grateful to Opposition Members for constructive debate in Committee and for their continuing support for this useful and important measure. Indeed, the Bill may have gone through its various stages at record speed, although I do not want to tempt fate. As the hon. Member for Cities of London and Westminster (Mr. Field) pointed out in Committee, it is when there is unanimous support for a Bill’s objectives that it is perhaps most important that proper scrutiny of its detail should take place. important. I congratulate the hon. Gentleman and the hon. Member for Richmond Park (Susan Kramer), who is not present this afternoon, on ensuring that scrutiny took place constructively and effectively. I should also like to place on record my thanks to my hon. Friend the Member for Gower (Mr. Caton) for so ably steering our scrutiny of the measure in Committee. I think it was the first time he had performed that role and we were all grateful for the efficient and effective way in which he did so. Our deliberations in Committee focused on two main points: first, whether a de minimis limit should be applied to regulation, and secondly, the need for continuing parliamentary scrutiny of the costs of regulation. I hope that I was able to assure the hon. Member for Cities of London and Westminster that the Government had considered the de minimis threshold carefully when drawing up the Bill. Indeed, we included a specific question on whether a de minimis limit was appropriate in our public consultation. As I made clear in Committee, the Government do not believe that it is appropriate to set a de minimis threshold for the regulation of home reversion plans and ijara home finance products because of the risk that less scrupulous providers might exploit it by offering multiple loans just under the de minimis threshold to the same borrower. The risks to the consumer of cumulative borrowing would be no different from those attached to a single plan for more than £50,000. We also believe that that could create a potential distortion in the market. The view received unanimous support in the consultation. The respondents to the consultation included a wide spread of home reversion providers, industry representative bodies, not-for-profit organisations and consumer representatives. The second issue is the proper and appropriate scrutiny of costs. The debate in Committee focused on this issue, particularly in relation to regulation in this area, in order to ensure that the costs remain proportionate. I made it clear to the Committee that ensuring proportionality of regulation is hard-wired to the DNA of the Financial Services Authority. The Financial Services and Markets Act 2000 obliges the FSA to ensure that regulation for which it is responsible is proportionate and takes into account the effects on competition, innovation and international competitiveness. Should the Bill pass successfully through Parliament, the FSA will consult publicly on the detailed rules that it intends to apply to home reversion plans and ijara home finance products. Included in the consultation will be a full cost-benefit analysis. Furthermore, the FSA is already accountable to Parliament on an annual basis. Its annual report is subject to parliamentary scrutiny and must set out how the authority has met its statutory objectives and principles of good regulation throughout each year. Those principles include the requirement always to ensure that the costs of regulation are proportionate. I was therefore able to reassure the hon. Member for Cities of London and Westminster that the proposed amendment requiring additional impact assessments was unnecessary and would simply create an additional burden for industry, without providing any clear benefit.