My Lords, I refer the House to my declaration of interests, particularly as chairman of the Personal Investment Management & Financial Advice Association.
It is very important to take this amendment seriously because of the reforms brought in by George Osborne. There are two halves to giving people freedom: one is
giving the freedom and the other is making sure that they have access to the best information in order to make the best choices. I fear that sometimes people find the first easier than the second.
I sat for some time as the representative of financial advisers on a committee of the then regulator looking into the financial understanding of people throughout the country. It was a very salutary experience, not least because many of the leaders of the providers were totally unable to explain what they were providing in language that I—being somewhat of a professional—could understand, let alone anyone else. My concern is that this is an industry that, even with the very best of intentions, is not very good at explaining the details. There are two reasons for that: one is that a special language is spoken by the experts and the second is that these things are very complicated. That is why, in many companies, people who are perfectly capable of being chairman or chief executive soon find somebody else to look after the pensions. It is a very complicated matter.
My concern is that the Bill needs constantly to look at the moments when people are most able and willing to receive advice. If that is also the point at which they most need the advice, it becomes particularly valuable. My noble friend might take note of one of the biggest changes to have happened in a quite different area. We were busy trying to get people to understand how important energy efficiency was. Many of the steps that we took seemed to have very little effect until we started to tell people, when they bought a new appliance under the European Union scheme, how energy efficient the appliance was. From one year to the next, we got rid of most of the GH levels and arrived at a situation where we were talking about A, A+ and A++. This was because we chose the moment when it was best to advise people. That is precisely what the amendment means. Not having it is not having the other half of the reforms.
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It is right to give people choices and allow them to make decisions about their own money. It is not right to say that other people know best. However, it is important to recognise that many of those who have this choice, this opportunity, are not well fitted to make such a choice simply because we have not had an educational system and the like which would give it to them, and because the democratisation of pensions means that many more people have a private pot—I hate the word “pot”—which, small though it may be for some, is very important for them in the future.
This is about the ordinary people who represent an increasing proportion of the public—even more so with auto-enrolment and so on—and therefore we have a particular duty in this House to protect them. It may be that many of our friends and the other people I represent are able to have financial advisers and wealth managers, but we should recognise now that it is a high financial barrier for those people to have that kind of advice. Unless we do something like this, we are denying the very people whom we ought to be protecting the protection which is particularly good at this moment, not only for them but for our society.