John Glen
MP for Salisbury · Conservative · United Kingdom
“I welcome the Chief Secretary to her new position, but what words of comfort could she give the residents of Salisbury in Wiltshire, a unitary authority? We are not part of a combined authority and we do not have a metro mayor.”
“Sam Moody is my constituent. He is the chief executive of Rockhopper. During my time in this House, he has been absolutely scrupulous in following the laws of this country and respecting the Falkland Islanders.”
“I listened carefully to what the Minister said about the process, and I respect that. But most people who take a pretty level-headed, pragmatic view of the need for a transition over time still cannot get their heads around the short-term reality: when we have so much turmoil in the middle east, why would we extend the time that we are no…”
“It is 55 days till the Budget. Given the market’s reaction to the Prime Minister’s statement on Tuesday, and given that our gilt rates are higher than those of our peers in the G7, could we have a debate on the implications of higher taxes for growth?”
“Before the hon. Lady makes her statement on Thursday, will she, when reflecting on the arrangement in Wiltshire that would embrace Wessex—although we have been told that that is not the Government’s view—address the prevailing concern that the people of rural Wiltshire will be considerably worse off without having the opportunity to embra…”
“I recognise that the Minister wants to come to what the Government are going to do, but does he not accept that the decisions already made in the last two years—with respect to the price of employment and the national living wage, the cost of employment with regard to legislation, and business rates—have depressed the appetite of many sma…”
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“That is the legal default, but as my hon. Friend will know, the Government hope, even at this late hour, to persuade him of the merits of passing the deal in the week of 3 June.”
“Absolutely. Another divisive referendum within 18 months would be completely contrary to what the First Minister said five years ago, which was that it was a “once in a generation” event. It would absolutely be a real crisis for Scotland.”
“As my hon. Friend knows, the FCA is conducting two investigations into the events at HBOS Reading and Lloyds has instructed Linda Dobbs to look into who knew what when. It is absolutely clear now that such circumstances could not be repeated given the action we have taken with the senior managers regime, but I look forward to the outcome of those reviews and we will be taking action accordingly.”
“I will now talk about action on unsuitable pensions transfer advice, because the British Steel case has also raised many questions about quality.”
“It includes ensuring that support and communications are in place for members of defined-benefit pension schemes, ahead of any restructures and consultations—something manifestly different from what happened in the regrettable case that we are considering. Another aim of the protocol is that there should be better co-ordination of the involvement of different public bodies through early intervention, expedited approval processes and improved information sharing. The bodies have also developed branded written materials for trustees, to ensure that there are better communications with pension scheme members, including letters to alert them to the risks of transferring out of DB pension schemes, and the giving of practical information.”
“There are, I think, 18 recommendations, and they include earlier intervention and intelligence sharing between the regulators and the Money and Pensions Service; improved support for members considering cash transfers out of defined-benefit schemes; improved guidance for trustees facing restructuring and other major changes; and improved message content clarity and channels. The Pensions Regulator, the Financial Conduct Authority and the Money and Pensions Service have publicly committed to addressing the review’s remaining recommendations. They have agreed a joint protocol to work together to ensure that consumers are appropriately protected.”
“There will be a series of announcements over the coming months about their intentions, but the body will operationalise in the course of the coming financial year. As to the lessons learned from the experience in south Wales with the British Steel scheme, the independent Rookes review, which considered the communication exercise that supported members of British Steel to take decisions on their pension, reported in January. It noted that there are important lessons for organisations to learn to prevent such a case from happening again.”
“Financial advice firms must be authorised by the FCA before they are permitted to provide advice, including on pension transfers, and advisers are required to provide financial advice that is suitable for the individual’s personal circumstances. The Pensions Advisory Service was an independent service offering free-to-consumer guidance on pension matters. As has been mentioned, it has recently been merged with Pension Wise and the Money Advice Service to create a new single financial guidance body, which is now known as the Money and Pensions Service. The hon. Member for Birmingham, Erdington asked from the Opposition Front Bench about the status of that body. The chief executive is now in place, and work is going on in this financial year to set up the processes for bringing those three entities together.”
“Several public bodies were involved in supporting scheme members to decide what to do with their British Steel pension, and it would be helpful to outline their different roles, because that will bring clarity to where the issues lie and how we can address them. The Pensions Regulator is responsible for negotiating and agreeing arrangements where an employer is unable to continue to support a defined-benefit scheme, as was the case for Tata Steel and the British Steel pension scheme. That includes guidance and oversight of the trustees and scheme administrators. As such, the Pensions Regulator was also responsible for the options available to BSPS members, the communications sent by the trustees and the deadlines for decisions to be made. The FCA is responsible for the regulation of the financial advice market.”
“Turning to British Steel, although most financial advisers offer sound advice, unfortunately there are cases where the advice people receive is not right for them. The British Steel case was one such instance and resulted from a unique set of complex circumstances. A minority of advisers were responsible for giving unsuitable advice, which resulted in losses for scheme members. The restructure of the British Steel pension scheme occurred at a time when there was considerable concern over the future of Tata Steel, and members were understandably worried about whether they were about to lose their jobs and pensions.”
“The Government and the FCA have now implemented all 28 recommendations from that review and will be reviewing the advice market again over 2019 to monitor progress and report back next year. The Government have also made financial advice mandatory for people considering a defined-benefit pension transfer where the value of the pension is over £30,000. That threshold is purposely low, given the dire consequences of taking poor advice and making unwise decisions—as has been said in relation to a number of cases this morning. That is to ensure that people consider the fact that they may lose guaranteed income in retirement and are aware of all the options available before they make such a complex decision.”
“Member for Birmingham, Erdington (Jack Dromey) concerning the status and other aspects of the pensions Bill. I was in front of the Work and Pensions Committee last week with my colleague, the Minister for Pensions, so I have some observations on that, but he has lead responsibility in that area, so I shall seek to secure a response from him. As the Minister responsible for financial services, I am committed to ensuring that a well-functioning financial advice market exists to support people to make the right decisions for them and their families. In 2015, as has been mentioned, the Treasury and the FCA launched the financial advice market review, with the goal of improving the accessibility and affordability of financial advice.”
“Many issues have been raised in the debate, and I will seek to respond to them all—particularly the importance of a well-functioning financial advice market. I have listened carefully to all those who have made observations about the aspects of that that are not functioning well. I will refer to the lessons that have been learned specifically in the British Steel pensions case; the actions the FCA has taken to address unsuitable pensions transfer advice; the protections in place for consumers; and the issue of so-called phoenix firms—an outrageous situation where individuals seek to leave behind responsibility for a previous, failed enterprise, recreate a new enterprise and therefore absolve themselves of responsibility. I am here as the Minister responsible for financial services. I note the questions that have been raised by the hon.”
“It is a pleasure to serve under your chairmanship this morning, Mr Howarth. I thank the hon. Member for Blaenau Gwent (Nick Smith) for securing this important debate. I know he has engaged extensively and constructively with the Financial Conduct Authority on these matters over the past year. I was pleased to meet him in February to discuss how we can avoid a repeat of the unfortunate circumstances that occurred in the British Steel pensions scheme case. I am aware of the extensive work he has undertaken with the hon. Member for Aberavon (Stephen Kinnock) and others from south Wales, and I know that the FCA has valued immensely that interaction to try to improve communications and other aspects raised in the debate this morning.”
“Work is being done on that, but with respect to the specificity of the default option, I cannot give the hon. Gentleman a definitive response now. I think we are moving to a point where there will be default pathways that people will need to be advised on when they take advice. I think that is probably a sensible compromise that deals with the fact that, in some instances, not coming out of the DB scheme would not be the right thing to do. The hon. Gentleman will agree about that, although he is also perfectly correct to say that, generally, not coming out would be the right thing to do. There is work to be done, but I think progress is being made, and I acknowledge the sensible point he has raised.”
“I have listened carefully to the hon. Gentleman’s interventions, and he is right to say that 6.6% of the 122,000 individuals who had those pensions did transfer out, and that, in general, the default option would not be to transfer out of a DB scheme. There is work going on to develop pathways. I am not clear, given that it is not my direct area of responsibility, about the status of that work. I think, however, that there is a challenge, in the context of the policy on freedoms that is now well under way, about how to reconcile that freedom with making the decisions in question. Perhaps I might pivot over to consider the DC schemes. I think what is happening is that many people decide to take the 25% tax-free lump sum and then do not necessarily make appropriate, or the best, decisions on the remainder of that pot of money.”
“To get back to my script, the FCA leads on financial advice and has considerable power to act against firms and individuals who provide negligent advice. To be clear: the FCA can impose a financial penalty on a firm, require the firm to pay redress to its customers, restrict the firm’s permissions, or prohibit individuals from operating in financial services. The FCA can bring criminal prosecutions. I hear the enthusiasm for that action being taken, and I think the FCA hears it too, but it works closely with other organisations to support criminal prosecutions. Both the Government and the FCA are targeting their attention on the effective regulation of financial services and wider work to tackle scams, including the recent implementation of a ban on pensions cold calling.”
“Following our meeting, I undertook to speak to Andrew Bailey, the chief executive. We are due to meet every few months, and our next meeting is imminent. I will speak to him about that. A number of live investigations are under way; I do not have investigative power myself, but I will take a close interest in those investigations. Individual companies—I will not name them—are being actively investigated now, and I expect the FCA to make announcements and recommendations consequent to those investigations imminently. I am not privy to the detail, but I am taking a close interest and will be speaking to the chief executive, because I realise that time is pressing on. This morning we have heard vivid accounts of individuals and families ruined by these decisions, and I take the matter seriously.”
“The FCA has already used those powers to prevent several individuals and businesses from avoiding their liabilities, and other cases are under investigation. This has caused some individuals to withdraw their applications, knowing full well that they will not get through. Although I acknowledge that this will not give absolute comfort to those who have suffered, I believe that we now have in place a regime that will prevent the practice in future.”
“That group were all clients of one firm, and the Government’s decision to make financial advice mandatory for those seeking to transfer their DB pension has therefore guaranteed a crucial layer of consumer protection to those individuals. “Phoenixing”—firms or individuals seeking to avoid liabilities arising from poor investment advice by re-emerging as a different legal entity—can leave consumers and taxpayers out of pocket and tarnish the reputation of the industry. The FCA has a range of tools to identify and act against firms or individuals who try to avoid responsibility in that way. Those seeking to liquidate firms must provide information about outstanding complaints, and the assets of collapsed firms cannot be sold on or passed back to former directors without the prior consent of the regulator.”
“The maximum award it can recommend was increased at the beginning of this month from £150,000 to £350,000 per individual. If firms go into liquidation and cannot provide compensation to individuals, a second tier of protection is open through the financial services compensation scheme. The FSCS is mainly funded by an annual levy on the financial services industry. Since its founding, the FSCS has helped millions of people and paid billions of pounds in compensation. It is important to note that in the British Steel case, only a very small minority of former steelworkers who have taken their claims through the FOS and the FSCS have not been fully compensated.”
“The FCA has already announced a requirement for all pension transfer specialists to obtain the same qualifications as fully regulated investment advisers, alongside their existing qualifications, by October 2020. In relation to the BSPS, the FCA intervened to stop 11 firms from providing pensions transfer advice, and several firms are still under investigation. It is important to ensure that consumers are protected from poor-quality and unsuitable advice, and there are proper mechanisms for redress when they receive poor advice. The first port of call for consumers to seek compensation is to approach the firm itself. If they cannot resolve the issue, consumers can take their complaint to the Financial Ombudsman Service. The FOS is a free, independent service that provides an alternative to the courts.”
“Although the FCA does not have a series of regional offices, there is a clear expectation on the part of the Government and the FCA itself that it will go out into communities across the country, to ensure it has a presence among the 35,000 IFAs that operate. The regulator is also undertaking further work on the pensions transfer advice market. The FCA is analysing responses to a recent data request from firms that undertake pensions transfer advice and is planning a programme of work, which is likely to include further engagement with stakeholders, targeted education for firms involved in providing pension transfer advice, and assessment of those firms significantly involved in the provision of DB transfer advice.”
“I am happy to respond to that intervention by saying that it is absolutely imperative that the FCA works with all bodies to hold those individuals to account and to take the appropriate action in the light of the evidence presented to it. This is urgent; the individuals who have suffered this experience expect that of the FCA, and I believe the FCA is keenly aware of that. The hon. Member for Blaenau Gwent talked about the regional presence of the FCA. It has more than 3,000 employees and runs an annual programme of regional supervisory workshops under its “Live and local” banner, in which it educates firms and gathers intelligence from across the country. That has included recent workshops on DB pension transfers.”
“A lot can be done as a consequence of the excellent work of the hon. Gentleman and his colleagues, and through my interaction with the FCA. I accept that there have been some differences of opinion in the Chamber this morning regarding the amount that can be done by regulatory intervention and legislative action. However, I will do all I can to ensure that we exhaust reasonable opportunities for the FCA to tighten up in all these areas. The example given by the hon. Member for Birmingham, Erdington of an individual who inadvertently, unwittingly and tragically led his 20 colleagues to make certain decisions, and the multiplier effect of those, was heartbreaking, and one that the Government need to respond to. I thank Members for the opportunity to respond to this morning’s debate.”
“Gentleman has discussed the matter with the FCA; I will do so as well and write to him. If it is not fit for purpose, it is not fit. I thank the hon. Member for Blaenau Gwent for bringing to the House this debate on a very important topic. I was pleased to hear that he is committed to supporting the communications work with the FCA to raise awareness among former BSPS members of their rights to complain and to seek justice. The Government, regulators and other organisations are strongly committed to monitoring the market for financial advice and defined-benefit pension schemes, and to taking decisive action to ensure that these events cannot be repeated. I recognise that Ministers often say that at this point, but I have listened sincerely and carefully to the points that have been raised.”
“I have been trying to find the note that one of my officials kindly sent me on the quantum of insurance. My understanding is that FCA-authorised and regulated firms must have insurance in place; if they do not, the FCA has it in its armoury to de-authorise. I listened carefully to the hon. Gentleman, and his point seemed to be on the amount of that insurance. I am happy to take that matter away and consider it. On the practice of phoenixing, I am given to understand that the FCA has done a significant amount of work in that area. It launched a programme of work in April 2018 to strengthen authorisations, and I have given some of the details. I do not want to waffle further on this point, but I will give consideration to the amount and level of insurance required. The hon.”
“Distributional analysis published by the Treasury at Budget 2018 shows that decisions taken by the Government on tax, welfare and spending on public services have benefited households across the income distribution, with the poorest households gaining the most as a percentage of net income.”
“No, it should reflect on the range of measures the Government took at Budget 2018, including the new energy price cap, the doubling of free childcare and the steps we have taken to reduce the burden on households by reducing fuel duty.”
“Loans of less than £25,000 to the smallest businesses are already regulated under the Financial Services and Markets Act 2000. The Government are committed to regulating only where there is a clear case for doing so, to avoid putting additional costs on lenders and businesses, and the Government welcome the recent expansion of the Financial Ombudsman Service and the establishment of a voluntary dispute resolution service.”
“I am sorry, but I cannot give the hon. Lady that undertaking. I really passionately believe that we need to resist additional Financial Conduct Authority fees, product reviews, increased compliance and monitoring costs for businesses, stifled product innovation and narrower product choice for small and medium-sized enterprises, which would be the consequences if we followed Labour’s advice on this policy area.”
“My hon. Friend makes a very fair point. That is why the Chancellor announced at the spring statement that we will require company audit committees to review payment practices and report on them in their annual accounts. This is part of a range of measures that the Government will be setting out shortly when we make a full response after the call for evidence.”
“We have taken direct action so that small businesses can get a direct and quick response by expanding the authority of the Financial Ombudsman Service and having a retrospective review through the dispute resolution mechanism. What businesses up and down the country want is quick action to deal with disputes that are unresolved.”
“As my hon. Friend knows through his excellent work with the dispute resolution service, there are some avenues for businesses to go down. Many—virtually all—lenders have now signed up to the standards of lending practice, and that, alongside the expansion of the Financial Ombudsman Service’s jurisdiction, gives businesses the assurance they need.”
“Automatic enrolment has reversed the decade-long decline in workplace pension saving. Department for Work and Pensions statistics show that since 2012 over 10 million people have been automatically enrolled into a pension. Minimum contributions increased this month to 8%, and everyone who is contributing at the minimum rate should see an increase in their overall remuneration package.”
“The Government do offer generous tax relief on contributions to, and investment growth within, pensions. We also enable tax-free access to a proportion of savings. It is right that the Government control the cost of tax reliefs, and the £3,600 limit is one method of doing that. I can assure my hon. Friend that all aspects of pension policy and the tax system are kept under review in the context of the wider public finances.”
“FinTech revolutionises financial services, promoting innovation, stimulating competition and incentivising firms to deliver better outcomes for customers. FinTech firms directly contribute £6.6 billion annually to the UK economy, employing over 60,000 people across 1,600 companies.”
“I am grateful to my hon. Friend for that question and for his work as chair of the all-party parliamentary group on financial technology over the last four years. The regulator is the UK’s leading authority for interchange fee regulation, as he knows, and it is conducting a review into the fees that businesses face when accepting card payments. I acknowledge his concern, and we are open to hearing views on this issue, and on digital payments more broadly, as part of our call for evidence.”
“As the hon. Gentleman knows, it is the Government’s policy to have an orderly exit from the EU. However, we know that FinTech has proved to be very resilient in all circumstances. We had record investment of £15 billion last year. That is testimony to the creative power of that industry, working in the financial services sector in the City.”
“We have a single economic crime board, which was set up in January and chaired by the Chancellor and the Home Secretary, to look at how better collaboration can tackle those challenges more effectively.”
“I am conscious that disguised remuneration and the loan charge were mentioned by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), and I will come to that issue shortly. The Government have a responsibility to ensure that everyone pays their fair share of tax—I am sure that feeling is shared across the House. We want to help people to pay the correct taxes on time by ensuring the system works as it is meant to. Some serious points have been made about the effectiveness of the system, which I will get to.”
“It is a pleasure to serve under your chairmanship, Sir David, in this very dry Chamber. I acknowledge the six excellent speeches that I have listened to carefully. I hope I will be able to respond to the whole range of concerns that have been raised, and specifically on the way in which IR35 has been implemented, as well as on the implications of the Taylor review. First, I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing this debate, and I thank everyone who has contributed. The Financial Secretary wanted to be here today—I suppose he could now come over and see how we are getting on—but the debate on disguised remuneration and the loan charge in the main Chamber meant he was unable to attend, so I am here in his place.”
“Our aim is simply to ensure that contractors who work through their own company pay the right tax. However, evidence suggests that the rules have frequently been misapplied, meaning that contractors acting as employees were incorrectly paying less tax than if they had been employed in the usual manner. In April 2017, the Government introduced reforms for public sector organisations that take on contractors through their own companies. The reforms mean that public sector organisations are now responsible for deciding whether the contractor is acting as an employee and is therefore within the rules, as well as for ensuring that the right amount of tax is paid. HMRC estimates that the reform has raised an additional £550 million in income tax and national insurance contributions over the first 12 months.”
“I certainly agree with the hon. Gentleman’s instinct that tax simplification is how all Governments should seek to develop tax reforms. I will make some observations about that later. As we have heard, the Government have set about extending the reform of the rules that govern off-payroll working. Those rules, known as IR35, were introduced in 2000—in fact, in the previous year’s Budget—to ensure that people working through their own company, who but for the existence of that company would be taxed as employees, pay broadly the same tax and national insurance as other employees. The rules do not affect the genuinely self-employed, and the Government recognise the massive contribution that contractors make to business and public services across the country.”
“The proposals would put a legal requirement on engagers to have a status disagreement process in place, and would require them to consider evidence provided by an individual contractor and review their status determinations accordingly. HMRC is committed to working with organisations to ensure they make the correct status determinations, and will publish detailed support and guidance to help organisations prepare well ahead of April 2020.”
“I cannot account for every case, but research was done to evaluate the issue because it was a legitimate area of concern. The vast majority of public bodies are making assessments on a case-by-case basis. I have looked into how that research was done— HMRC commissioned an external independent organisation to speak to central Government Departments, the NHS and local government departments to ascertain that. Having listened to people’s concerns, we included proposals in our recently published consultation to help to ensure that processes are put in place for individuals to resolve disputes with their engagers directly and in real time.”
“Enhancements will be tested and rolled out before the reforms are introduced in 2020. I asked officials for greater clarity on what that is likely to mean, and we are talking about improved guidance, better phraseology and improved language that gives greater certainty to individuals who make inquiries. The hon. Member for Brentford and Isleworth (Ruth Cadbury) mentioned the issue of blanket decisions in the example she gave. Members have expressed concern that businesses might take a blanket approach to applying the off-payroll working rules to contractors without looking at the facts of individual cases. Independent research suggests that has not generally been the case in the public sector, where the reform has been in place since April 2017.”
“CEST was developed in consultation with stakeholders, including tax specialists and contractors, to assist individuals and public authorities in making the correct determinations. HMRC will stand by the result of CEST, provided the information entered is accurate and in line with HMRC guidance. It gives an answer in 85% of cases, and where it does not, more detailed guidance and support are available through a telephone number for individuals. To support organisations in applying the rules, HMRC will continue to review and improve CEST. HMRC has already held user research sessions, and will continue to work with stakeholders over the coming months to ensure that the tool and the wider guidance suit the needs of all sectors, and to address specific points raised during the consultation.”
“It will not extend to the smallest 1.5 million businesses. In addition, it will take effect from April 2020, to give businesses and other organisations time to prepare. The Government are consulting on the detailed design of the planned reform, and we are listening carefully to the representations made. Our aim is to provide the individuals and organisations concerned with greater certainty about how the off-payroll working rules will operate from April 2020 in all sectors, including about the actions they can take to prepare for the changes. Hon. Members talked about HMRC’s check employment status for tax—CEST—tool and raised some questions about its effectiveness.”
“I am not aware of any distribution analysis, but I will check with officials, and if I can give clarification on that, I will do so by letter. Non-compliance in the private sector remains a persistent and growing problem that, if left unchecked, will cost the taxpayer as much as £1.3 billion by 2023-24, according to the Government’s estimates. In last year’s Budget, the Government announced that we will extend the reform of off-payroll working rules to all sectors, including the private and voluntary sectors. That will help to address the issue of non-compliance and to ensure there is a level playing field for the public sector and other sectors when hiring contractors. The Government have listened to the views of individuals and businesses and have decided that the reform will apply only to medium and large organisations.”