Saving Gateway Accounts Bill

My Lords, as the noble Baroness said, the amendment relates to the maturity of saving gateway accounts, and it may be helpful if I remind noble Lords of what will happen at that point. Our key principle is that savers should be able to choose what happens to their money. There is no defined purpose that the account balance or the maturity payment must be used for, and there is no defined product for it to move into. Account holders will be able to spend their money, continue to save it, or spend some and save some. However, we want to make it easy for people to continue to save if they choose to—which the pilots suggest many will. Therefore, providers will put in place default rollover accounts, and if an account holder does not make an active decision about what they want to happen to their savings, their money will be transferred into one of these accounts. The amendment raises the question of whether the characteristics of the default rollover accounts should be regulated, or whether the Government should at least have the reserve power to regulate them in future. The noble Baroness spoke about this in Grand Committee. I have also looked closely at the thoughtful comments made on the subject by Mr Mark Hoban in the other place. We believe that there are certain desirable characteristics for these accounts. They should be interest-bearing and cash-based, and allow account holders access to their money. We have carefully considered the option of regulating the accounts. However, we have decided against this for four principal reasons. First, we believe that providers will want to be fair to their customers and put in place appropriate options, and that regulation therefore will not be necessary. The noble Baroness may say that this is a triumph of hope over experience. When I listen to the noble Baroness castigating the banks, I often think that she and I should swap parties. I have considerable confidence in the fact that banks can be relied upon to behave towards their retail customers in a fair manner, consistent with competitive conditions; whereas the noble Baroness brings considerable scepticism to that conclusion. By nature I have a sunny disposition and am inclined to give people the benefit of the doubt. We believe that providers will want to be fair to their customers and put in place appropriate options. That view was supported by the representatives of the potential account providers from whom the Public Bill Committee heard in the other place during evidence sessions. I realise that the noble Baroness, Lady Noakes, would point out that this argument is only against regulating now, and not against taking a reserve power in case it is required. However, the remaining three reasons that I will offer are arguments against regulating at any point. The second argument is that regulation simply would not achieve a great deal. I suspect that all noble Lords will agree that default rollover accounts should be interest-bearing. However, even if we were to regulate for that, I do not believe that it would be appropriate for the Government to set a minimum interest rate, which would imply a judgment on what level of interest it was right for saving accounts to pay. Even if accounts were required to be interest-bearing, providers could still pay derisory interest rates if they chose to do so. I remind noble Lords that when the Conservative Party was last in government, interest rates reached 17 per cent as a consequence of the extraordinarily high rate of inflation.