I am delighted to contribute to today’s debate. The Bill deals with a range of issues, but I want to focus on pensions. The pensions market is often complicated and confusing, so any moves to make it more accessible to consumers must of course be welcomed, although we on the Scottish National party Benches are still disappointed that the Government have not championed a fully independent pensions commission to look at all aspects of pensions. We want a pensions system that is fair for all, but the opportunity to achieve that has not been presented today. However, we will continue to argue for it.
We know that there is a challenge in addressing consumer confidence on pensions. Too many people feel that pensions, though important, are over-complicated, and that can create inertia and inaction. That can have a profound effect on pension outcomes, as the decisions that consumers make can have serious financial consequences for their future. The Bill offers a perfect opportunity to introduce a legal duty of care on financial institutions and to put the most vulnerable members of our communities at the heart of decisions and services that can be used to protect them. It is disappointing that that has not been enshrined in the Bill, but I am confident, given what I have heard today, that the Minister is paying close attention to that point.
We need to be sure that consumers have access to the best independent advice, especially those who are vulnerable. Pension matters are confusing and can be complicated. We need to be confident that, whatever decisions people make about their pensions, they are properly and independently informed. I wonder how many consumers are even aware of Pension Wise, which offers free independent advice on pensions. What more can the Government do to promote such services? I heard the Secretary of State talking earlier about the service’s reach being improved as it is amalgamated with other services, but sadly I did not hear any details about how that might happen. We have to remember that those most in need of independent financial and pension advice are often the hardest to reach.
The Financial Conduct Authority pointed out that consumers may be choosing to draw down their pension instead of shopping around for what may be a more appropriate pension product because they find choosing between the alternatives simply too challenging. The challenge for those of us trying to understand pensions and how to get the best deal has been complicated by the introduction of pension freedoms and new savings products. There is nothing wrong with introducing such freedoms to allow people more say and choice about financial options in retirement, but vital safeguards for older people who may choose to free up funds were missing or not prominent enough when such schemes were introduced. More work needs to be done to ensure that those who choose to free up funds get the financial advice about the long-term implications of making such choices that is correct for their particular circumstances, especially as so many of us can expect to live long lives in retirement. We need to be careful that we are not living longer simply to live in poverty and that the vulnerable are not easy prey for those who would take advantage.
Poor advice on pension decisions can lead to years or even decades of lost benefits and a much reduced quality of retirement. I understand that the aim of merging the current services into one is to create a more efficient service, but I want more detail on how that will be done in practice. What specific measures will be put in place to ensure that the new service will actively engage with people of pension age? Australian research into that issue shows that a substantial minority consume their pension pots quickly, with around 25% of people exhausting their pot by the age of 70 and 40% by 75. That really should give us pause for thought.
As we heard earlier, accessing pension pots early has become the new normal, but the FCA has expressed alarm that many who do so do not access independent, impartial advice. Indeed, only about 20% of those who accessed their pension pots in the third quarter of 2016 had a Pension Wise appointment, either by telephone or face to face. As for the other 80% who accessed their pension pots, one has to wonder what advice they received—if any. Did they get the best advice as they made that important decision? Were they vulnerable consumers? How can the interests of such people be best protected? I am sure that the Minister remembers the fallout from consumers taking out endowment mortgages because the advice they were being given was not always the most robust. We do not want to be looking back at this debate in 10 years’ time and saying the same about those who accessed their pensions early.
If we do not address the complexity and confusion around pension information and the difficulty of reaching some of the most vulnerable consumers—those who are arguably the most in need of robust independent advice—we shall only see younger generations feeling alienated from the whole concept of long-term saving for retirement. The SNP welcomes the fact that clause 2 includes a recognition of the need to bear in mind the needs of those in vulnerable circumstances, but I cannot impress it strongly enough on the Minister that we need more detail of how that will work in practice. What statutory weight will it be given? Much more detail is needed on how free independent pension advice can extend its reach, and I look forward to hearing from the Minister.
The Bill does seek to address the need to protect vulnerable consumers, but more robust measures are needed. We know that scam calls are a huge issue in our communities, with 10.9 million consumers receiving unsolicited contact about their pension since April 2015. I continue to wait for the UK Government to deliver on their promise to adopt into legislation my ten-minute rule Bill on unsolicited marketing calls. Despite enthusiastic initial support, the dates mooted for bringing it in— April 2017 and October 2017—have passed without incident or explanation from the Government despite my best efforts to elicit some kind of response via umpteen written questions, questions on the Floor of the House, a point of order, about half a dozen letters to the relevant Secretary of State, and other ingenious ways. Support for that Bill has clearly waned somewhat and that is a real cause for concern, especially given that I have heard warm support from Government Members for measures in that area.
The new plan to bring forward proposals to tackle cold calling must focus on director-level responsibility if any such measures are to have the required strength to deal with this blight on consumers. Such proposals ought not just to be about pensions—although they are a very important area—because all consumers in all industries and all sectors must be protected, and I am keen to hear whether that will be the case. I realise that not all areas are within the scope of the Bill or for the Minister to decide upon, but I know that he will take that point back to his colleagues with great enthusiasm. I am becoming increasingly impatient with the delays, as are my constituents, people across the UK and, I expect, Members across the House. So when I hear that action on unsolicited marketing will be taken in “early 2018”, if the Minister is being kind, he will understand my scepticism about yet another deadline and what this “action” will be. Will there be any measures to deal with director-level responsibility? If not, why not? Perhaps the Minister can address that in his closing remarks.
If we are banning cold calling to protect people’s pensions, that is an admission that cold calling is a problem. If it is problem with pensions, it is a problem for all consumers in all areas. We need to protect people, and cold calling causes fundamental problems. I am extremely disappointed with the shilly-shallying around extending the recognition of the need to protect people outwith the pensions sector. The UK Government committed to considering director-level responsibility, even going so far as to put it on their website for well over a year. It is therefore a bit curious that they have gone suspiciously quiet on that despite, as I say, my best efforts to use every means available to me in this House to elicit some kind of response.
For consumers who want to access their pension early and to do so based on sound advice, we need to ensure that they are making the correct decisions, and I say good luck to them. However, our concern must be for those who do not have access to robust independent advice that safeguards their long-term financial interests and who will find themselves in financial difficulties as result of poor advice or a lack of advice. I want the Minister to put some flesh on the bones of how the reach of financial advice will be extended, particularly to vulnerable consumers. I remind the Minister that
there are thought to be around 800,000 people living with dementia in the UK. Even conservative estimates suggest that by 2030, that figure could be as high as 1.2 million. Their interests must be protected with demonstrably robust measures and a genuine duty of care. Policy making in this area must be mindful of and guided by that notion, and a new approach is essential to improve guidance usage among non-advised customers. The SNP sees the Bill as a positive step forward, but there is more to do, and a few minor legislative changes could save consumers now from many potential difficulties in the future.
7.19 pm