My Lords, I thank the Minister for presenting this order. He has clarified my only concern of understanding. I wish I had had the conversation with him four or five working hours ago. As I understand it, the order does all sorts of bits and bobs, but its essence is in Article 7.8 which fills a hole in the FCA applying these standards to the transfer to trust-based schemes. It took me a great deal of time to find out the difference between a contract-based scheme and a trust-based scheme. I shall not repeat my understanding lest I have it wrong, but that seems to be the essence of the order.
The “Regulatory Triage Assessment – final stage” document offers three alternatives. Option 2 is:
“Amend the FCA’s Regulated Activities Order via statutory instrument such that advice on occupational transfers is fully regulated”.
It does not give a very convincing reason why it should not do this. It is not that we are not supporting this Bill. The Opposition have not opposed the general essence of what the Chancellor is trying to do, but the size of what is happening and the importance of quality advice cannot be overstated.
I believe it has been estimated that perhaps some 500,000 defined benefit scheme holders may seek transfers almost straightaway. I think that a firm called Hargreaves Lansdown has done that. Given the very sudden discontinuity that will occur in April, is the Minister confident that the advice industry has the capacity to meet people’s needs? Does the pensions industry have the ability to meet the apparently thousands of transfer requests that it will face? Is the Minister happy that the mechanisms are available to protect the public
from fraudulent operators? Does the Minister think that the Government have done enough to educate the public on the size and challenge of the changes they face? I happened to come across an article in the Observer this weekend which was rather less than reassuring. It said:
“Figures from insurance company Zurich show that, while the average length of retirement is 25 years, over half the population believe they will be retired for 20 years or less. Most people also predict they will not live beyond 85. But figures suggest half of people retiring now could live to 90 or beyond”.
That does not show an appropriate level of public understanding in facing this significant change. The noble Lord’s colleague, Steve Webb, the Minister in the other place, did not exactly use resoundingly assuring language in the article. He said:
“We wouldn’t be doing it if we thought it was a disaster, but you do take a risk when you trust people with their own money”.
I wish that his tone had been slightly more reassuring—I hope that the Government have a rather greater aspiration than the avoidance of disaster. I hope that in the short time left before April they will do their best to improve the level of education among the general public so that not too many people make decisions that they subsequently regret.