Equitable Life

Heather Wheeler Excerpts

Thursday 21st January 2021 Commons Chamber

[Mrs Heather Wheeler (South Derbyshire) (Con) [V]]

I am afraid we are all here again, having another debate about Equitable Life and the dreadful way that our constituents have been dealt with. To begin with, I thank my hon. Friend the Member for Harrow East (Bob Blackman), my dear friend, for being so assiduous over this matter and for his continued chairmanship of the APPG. I congratulate the Backbench Business Committee on agreeing to have this debate today, even though it has been delayed for so long. However, I am very glad that we are here again—albeit unbelievably here again, and I see the poor Minister on the Front Bench yet again having to reply. We will hear some calm words from him later, I am sure.

The facts are so well known: 895,000 people have suffered dreadfully through no fault of their own, and the pre-1992 people are excluded as well. This is just a dreadful history of the bad leading the bad, and we hope that the good story that could come out of this really will be listened to by the Treasury. None of us is in a position to chuck money around, but ultimately, we all know that with these people, who are getting older, when the possibility of another £2 billion actually comes down to them and to their families, that money will be recycled straightaway into all our communities and the Treasury will get it back in VAT or whatever way possible.

I am not going to go on, Madam Deputy Speaker, because I know that lots of people want to speak. But on behalf of Michael, Colin, Tim, Kevin, Agnes and Peter, Tom, Patricia and Bob, Neville and Colin—dear constituents of mine who are suffering very, very badly—I really do want to see some wriggle room from our dear friend the Minister on the Front Bench. I sincerely hope that in the mix of conversations that are going on in the Treasury, particularly over the issues of these miscalculations, the fact that people had to appeal themselves, and the rise from 50-odd quid to 8,000 quid, it sees that it is a nonsense and that this pain needs to stop. I will finish there. The good people of South Derbyshire need to know that the Treasury is listening.

Future of Financial Services

Heather Wheeler Excerpts

Monday 9th November 2020 Commons Chamber

[Rishi Sunak]

Maybe I can help clear this up for the hon. Gentleman. There are a set of decisions that we can make unilaterally. There are others that we cannot, because the nature of the decision requires mutual collaboration between us and the other partner. We have obviously refrained from making those decisions. We have also refrained from making decisions where it would not be in our economic self-interest to do so. But we remain ready, and we stand ready, to talk constructively and co-operatively with our European partners and reach agreement on the remaining outstanding decisions.

[Mrs Heather Wheeler (South Derbyshire) (Con) [V]]

I thank my right hon. Friend for his statement. I strongly welcome the new sovereign green bond, an idea I have been promoting for many months, especially in the far east. Can he explain how he will ensure that the projects invested in are suitable projects?

[Rishi Sunak]

I pay tribute to my hon. Friend’s campaigning on this important issue. She asks the right question to make sure the money is going where we want it to go. I can give her the reassurance that we will be using the use of proceeds structure, along with the principles from the International Capital Market Association. That is the most widely used and recognised structure in the ESG—environmental, social and governance—investing space, and it is the structure that is used by pretty much all other sovereign issuers. It will ensure that the money raised goes where it is required and deserves to go.

Covid-19

Heather Wheeler Excerpts

Monday 11th May 2020 Commons Chamber

[Mrs Heather Wheeler (South Derbyshire) (Con)]

Thank you, Mr Deputy Speaker, for calling me in this important debate. I also thank my right hon. Friend the Paymaster General for her tireless work in pulling together so many different strands of Government activity during the covid-19 crisis. We are very grateful.

I want to talk about the amazing community activity happening in South Derbyshire, as part of the local response to covid-19: our wonderful CVS, which has helped to co-ordinate volunteers across South Derbyshire, making sure that people do not run out of food or medicine and are not lonely; our wonderful individuals, such as Stephen Greaves and Andrew Astle; the teachers at Granville and Pingle Schools, who, as volunteers, have been making face visors with 3-D printers; and the Wood children of Melbourne, who made up and sold quizzes—all of whom have been raising funds for the local medical charities.

But against the good news of that great community spirit—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

We can hear you. Please carry on.

[Mrs Wheeler]

But against the good news of that great community spirit, we have had the tragic news of over 19 people dying locally from covid-19. That number includes Eileen Landers of Swadlincote, a lady who worked tirelessly for decades at Burton Hospital on the housekeeping staff. Our thoughts and prayers are with all the South Derbyshire families who have lost loved ones to this dreadful virus.

That brings me to my ask of the Paymaster General, representing the Cabinet Office. I am asking for support from the Cabinet Office for my campaign to have a memorial placed at the National Arboretum, at the heart of the country, as a fitting way to commemorate the sad loss of essential key workers to covid-19. I am delighted that my right hon. Friend the Secretary of State for Health has agreed to support the campaign. I am now looking at the Cabinet Office as another sponsor to help to co-ordinate all the different sectors of essential workers involved, whether in healthcare or transport, wherever they are across our nation. They carried on working when this virus was at the highest level. They gave their lives to keep our hospitals open, keep food in the shops and get people to work.

I am also calling on the relevant trade unions to get involved to help to raise public subscriptions to pay for the memorial. I am grateful to my local newspapers, the Burton Mail and the Derby Telegraph, for supporting the campaign, as well as the Daily Express, my colleagues in Parliament who are supporting the campaign and, finally, the good people of the South Derbyshire and Burton area who have contacted me with support. I also thank Brell Ewart of Whitehouse Construction Ltd of Derby, who, as part of a donation, has offered to install the memorial free of charge, an incredibly generous offer to help to kick-start the campaign.

As I know there are many MPs who wish to speak, I will wrap up my contribution by thanking Ministers, civil servants, local government officers, volunteers, shop workers, farmers and, of course, key workers for everything they have done for us at home here in South Derbyshire and nationally. The fight is not yet over, but this human endeavour is an excellent example of how when life is bad, good can come out of it. I, for one, am proud of the response from the Government and the country to this dreadful virus.

Financial Conduct Authority

Heather Wheeler Excerpts

Monday 1st February 2016 Commons Chamber

[Guto Bebb (Aberconwy) (Con)]

I beg to move,

That this House believes that the Financial Conduct Authority in its current form is not fit for purpose; and has no confidence in its existing structure and procedures.

It is four years since I first raised the issue of interest swap mis-selling in this Chamber. Since then, I have led three Back-Bench business debates on the issue; an Adjournment debate on the Connaught Income Fund, which is another example of financial mis-selling; and a debate on the global restructuring group. I have also contributed to an effort to secure a debate on the future of the Royal Bank of Scotland. It is clear that I have attempted to utilise this House to bring to the attention of Members and the wider public the issue of financial mismanagement and the lack of financial regulation in the marketplace.

Some people have argued that this debate and this motion are premature. Given the evidence and information that I will present, I argue that they are long overdue. We must remember that the Financial Conduct Authority has a clear and specific mission statement:

“We aim to make sure that financial markets work well so that consumers get a fair deal.”

It states:

“This means ensuring that the financial industry is run with integrity, firms provide consumers with appropriate products and services, and consumers can trust that firms have their best interests at heart”.

I believe that the five examples that I will give in my opening speech make it clear that the Financial Conduct Authority is failing against that mission statement.

I will highlight five areas. First, I will touch on the voluntary redress scheme for the mis-selling of interest rate swap products. When I am feeling positive, I think it is a glass-half-full redress scheme, but most of the time I believe that it is a glass-half-empty one. The fact that the glass is half empty after four years is something that I take quite personally.

[Heather Wheeler (South Derbyshire) (Con)]

Does my hon. Friend agree that the glass being half full has been okay for some constituents, but that for those who are looking for consequential losses as well, the glass has been absolutely empty?

[Guto Bebb]

My hon. Friend makes an important point about one of the failures of the redress scheme. Too often, the FCA has hidden behind the argument that 80% of the people involved in the redress scheme have accepted their outcome. What it is not willing to admit is that people have accepted the outcome under duress because they needed to keep ahead and get their lives back on track.

The other four areas that I will talk about are the Connaught Income Fund, the FCA’s involvement in the report on the failures of HBOS, the promised report on the global restructuring group and the decision not to move ahead with the review of banking culture, which was communicated on new year’s eve.

Domestic Politically Exposed Persons: Money Laundering Rules

Heather Wheeler Excerpts

Wednesday 20th January 2016 Commons Chamber

[Mr Walker]

My hon. Friend’s intervention brings me nicely on to the next part of my speech. The aggressive application of de-risking by the banks comes despite assurances from Lord Deighton, the then Commercial Secretary to the Treasury, to his colleagues in the other place, on 14 October 2014, when he said—I quote again I am afraid—that

“while UK parliamentarians are not currently considered to be “politically exposed persons”—or PEPs—domestically, revised global standards to which the UK is fully committed will require that they are treated as such. These global standards require enhanced due diligence and ongoing monitoring only when the business relationship is assessed as high risk. The UK will make representations when negotiating the fourth money laundering directive to ensure that it reflects these standards.”

Lord Deighton went on to say:

“The key here is in the approach of the banks in doing their due diligence appropriately. The main feature of these arrangements is that domestic PEPs should be assessed in terms of their level of risk, and in the main UK parliamentarians should be assessed as low risk and, frankly, treated in precisely the same way as any other customer. The problem is when banks do not apply the right kind of risk-based assessment and instead revert to inappropriate box-ticking approaches.”—[Official Report, House of Lords, 14 October 2014; Vol. 756, c. 114.]

What is now obvious is that the banks have not paid the blindest bit of regard to the entreaties of Lord Deighton. In advance of the fourth money laundering directive, they have decided to apply the rules with no regard to any assessment of risk. This should come as no great surprise. The financial crisis that the banks sprung on us in 2008 clearly demonstrated that they have no, or at best a limited, understanding of risk.

[Heather Wheeler (South Derbyshire) (Con)]

I apologise for being detained at the very beginning of this debate.

Would my hon. Friend be as surprised as I was to be phoned up by a bank that I had banked with for over 30 years to be told that I was high risk, that the bank would not deal with me any more and that it was closing my account? That was a phone call I received in my parliamentary office. Subsequently, a second bank has written to tell me that it is closing my bank account—with no explanation whatever.

[Mr Walker]

That is an outrageous act by banks. The banks would argue that they are not public utilities, but my response would be that they are, because it is taxpayers and us who have bailed them out. They have a responsibility to behave responsibly, whether it be to Members of Parliament, small businesses or our constituents.

We are now faced with the somewhat laughable situation that not only Members of Parliament are being assessed as high risk in regards to money laundering, but their extended families are, too. On the basis of this Chamber alone, that puts nearly 10,000 people in the frame.

In common with all parts of the population, Members of Parliament can, of course, do bad and stupid things. That has always been the case and always will be the case. When it comes to our elected politicians, however, it is impossible to imagine a more scrutinised group. Not only do we have to register details of our commercial activities with the Register of Members’ Financial Interests—under pain, in extremis, of being dismissed from this place if we fail to do so—but we have the likes of The Daily Telegraph, the Daily Mail and Channel 4’s “Dispatches” breathing down our necks in the hope of catching the slightest whiff of wrongdoing.

Indeed, it often comes as a great disappointment to our pursuers that so few of us cavort with international despots and criminal masterminds. The much less glamorous truth is that most Back Benchers indulge in far more mundane but worthy pursuits, such as trying to sort out our constituents’ housing and street-lighting problems. Indeed, the tiny fraction of Back-Bench colleagues who lead altogether more politically racy lifestyles are well known to the media, with their activities well reported. It must be remarked, “Oh, what a friend the banks’ compliance departments have in Fleet Street and the House of Commons Press Lobby.”

That, of course, leaves Ministers, but again the Executive discretion Ministers have in relation to contracts is minimal. The tendering process is conducted by civil servants, with the Minister passed a single name to sign off on or, if they are lucky, perhaps the option of two names, with the chance to exercise a smidgeon of discretion given only under the careful watch of the permanent secretary.

In concluding my comments, I say this to the Minister and the banks: regulation needs to be proportionate to the risk.

Future Government Spending

Heather Wheeler Excerpts

Wednesday 4th March 2015 Commons Chamber

[Chris Leslie]

I am conscious that there are many hon. Members who want to get in so I will limit the number of interventions hereafter, but how could I resist giving way to the hon. Member for South Derbyshire (Heather Wheeler)?

[Heather Wheeler (South Derbyshire) (Con)]

The hon. Gentleman is very kind. He speaks about tax cuts being only for the top 1%. Will he congratulate Conservative-controlled South Derbyshire district council, which is not only holding the council tax for the fifth year running, but is going to give a rebate in July to every council tax payer in the whole of South Derbyshire? They will all get a council tax rebate.

[Chris Leslie]

Local government matters are for individual authorities. I know that there are a number of authorities that are struggling financially and finding things very difficult, not least because the funding formula has been so heavily rigged and skewed by the Secretary of State for Communities and Local Government. I do not know the individual case of the hon. Lady’s district council. Individual local authorities will have to make their own decisions. Her constituents, like others, have to look at the situation in the round. The Government are very good at giving a little bit with one hand, and taking back so much more with the other. Her constituents know about the rise in VAT that she voted for and those cuts to tax credits, among other things.

EU Budget (Surcharge)

Heather Wheeler Excerpts

Monday 10th November 2014 Commons Chamber

[Mr Osborne]

If the separatists had had their way, Scotland would not be in the European Union. But I make this point: Commission Vice-President Georgieva confirmed in the press conference afterwards that there was no way that member states could have known the net figure until 17 October, which was when the official meeting took place in Brussels. That has also been confirmed by the Dutch Prime Minister and the President of the European Commission. Again, this is one of those examples in which the shadow Chancellor says that he knew better than the rest of us, but those Heads of Government confirm that Britain could have known only in late October.

[Heather Wheeler (South Derbyshire) (Con)]

Does my right hon. Friend agree that not only is this a superb deal for the UK, but if the people vote for a Conservative Government in May 2015, the people will have a vote in a referendum about it?

[Mr Osborne]

As my hon. Friend says, the key point is that we are offering the people of Britain a vote on the membership of the European Union, which we will then seek to reform. Interestingly, it is not only the hon. Member for Vauxhall (Kate Hoey) who has made her point on Europe, but the last Labour Chancellor, who says he now supports a referendum on Europe. It would be interesting to see what the shadow Chancellor really thinks.

--- Later in debate ---

[Kerry McCarthy (Bristol East) (Lab)]

My constituents would have expected the Chancellor to negotiate the best possible deal on a rebate. They would also have expected him to negotiate down the surcharge. Is it not the case that he has not done the latter at all? It is not a penny less than it would have been and the accounts will show that the figure is still £1.7 billion.

[Heather Wheeler]

You would have paid the whole lot!

Oral Answers to Questions

Heather Wheeler Excerpts

Tuesday 28th January 2014 Commons Chamber

[Danny Alexander]

The hon. Lady is right, of course, that the financial crisis that took place when her party was in office cast a long shadow over the personal finances of millions of people in this country. However, she omits to mention that many of the people she refers to were paying income tax under the previous Government, and it is thanks to this Government’s policies that they are no longer doing so.

[Heather Wheeler (South Derbyshire) (Con)]

19. I want to extend the previous question to the difficulties of pensioners who are stuck on low-performing annuities. How will the Government open up the market and improve annuities for the future?

[Danny Alexander]

We have already taken steps to ensure that the annuities market works better. We are examining it further to ensure that people who have saved for a pension can get a proper deal in retirement.

Rothschild Bank and Mortgage Equity Release (Spain)

Heather Wheeler Excerpts

Wednesday 22nd January 2014 Westminster Hall

[Huw Irranca-Davies (Ogmore) (Lab)]

It is a delight, Mr Turner, to serve under your capable stewardship again this afternoon. I am delighted to have secured this debate about an issue of direct concern to not only my affected constituents but, as I have become aware, several hundred other UK citizens. I am seeking justice for them. I urge financial institutions such as Rothschild to come clean on their involvement and to discharge their moral responsibility towards people, many of whom are elderly and retired, who risk being left destitute. That has happened primarily because they had good reason to believe that Rothschild was the reputable and trusted brand behind a financial product that now looks more and more like a property scam and mis-selling. Will the Government and the Minister investigate the matter fully to assess whether victims have been scammed and there is a case for compensation? Will the Minister speak to Rothschild to make a moral case about what the bank may end up defending in courts in Spain, the UK and elsewhere on the flimsy pretext of, “Not me, guv”?

The matter resembles nothing more or less than an equity release scam, and it is not only Rothschild that is linked to it. Other banks, including Scandinavian and British ones, lured pensioners into gambling away their lifetime savings and homes on two enticing but ultimately flawed pretexts: first, that by investing in a loan secured against a mortgage on a property in Spain, they would obtain a small income additional to their often limited pension in retirement; and, secondly, that by registering a mortgage on that property, they could be helped in eliminating inheritance taxes for their children. Imagine an elderly couple who have worked hard all their lives, paid their taxes and contributed to society and the community—a professional couple who have planned for their retirement carefully, one of whom has suffered significant health problems in later life. They have invested all their wealth and savings in one retirement property in Spain. They do not have other assets or sources of wealth, and they are offered an enticing double bonus of releasing equity and gaining inheritance tax advantages regarding their retirement property in Spain.

Such an enticing offer perhaps sounds too good to be true, and it certainly was for my constituents, a retired couple whose lives I have just described in summary. When that offer is packaged and presented as being backed by such an eminent and reputable financial institution as Rothschild, that is the icing on the cake. They might have thought twice if they were dealing with some fly-by-night operator, but Rothschild? Even someone unfamiliar with the financial world would recognise that name and see it as conferring some prestige and status on any product being offered.

Rothschild is, as its website and company information proudly proclaim, one of the world’s largest independent financial advisory groups, employing around 2,800 people in 40 countries around the world. This worldwide brand proudly states that its 200-year-old reputation is based on clear values of excellence, teamwork, focus on the client, the long-term interest of the client and—at the top of the list—putting the client first. Rothschild explains:

“We provide outstanding client service, with the highest standards of professional integrity to build enduring relationships of trust and confidence.”

I say to Rothschild: “You have badly deviated from your core values, badly served your brand and reputation, and badly served people who regarded themselves as your clients and not the clients of some intermediaries, as you claim. They are now facing penury after investing in products in which your name—Rothschild—your integrity and your values were used as a key selling point.” To walk away from those hundreds of citizens and to deny not only liability, but any assistance, and to force them through costly court actions in Spain or elsewhere, is a stain on Rothschild’s history. The Rothschild family motto “Concordia, Integritas, Industria”—harmony, integrity, industry—seems somewhat absurd when my constituents and others face personal ruin.

As I mentioned earlier, Rothschild is not alone in the firing line. Danske Bank, Sydbank, Nykredit and others are not only in the firing line over this, but in the dock, with some people in custody. A warrant was issued in Spain by the general directorate of police and the Guardia Civil in Madrid on 26 November for two Rothschild employees, Mark Coutanche and Stephen Dewsnip, who are directors, to appear in court to face criminal charges. The warrant relates to accusations that N. M. Rothschild & Sons sold mortgages to Spanish-based pensioners as a tool, albeit a legal one, to defraud the Spanish tax office and deliberately concealed crucial data that would prove that its equity release product was impractical as an investment.

Let us look at the evidence for the case against Rothschild and others. They completely, unarguably and incontrovertibly provided support, training, the terms of business for intermediaries selling the inappropriate products, supportive promotion through glossy brochures and websites, and much more. For Rothschild to say that it was not directly involved and that the product was sold through intermediaries, which distances it from the situation, is akin to a parent saying to their child, “It’s not my fault that the Christmas presents are broken or cruddy, it’s Santa’s—sue him!”, or to a retailer blaming its supply chain for worker exploitation in Bangladesh when it is selling T-shirts for £2, or for horse meat in its beef lasagne. It is not good enough. We all know who should take responsibility.

[Heather Wheeler (South Derbyshire) (Con)]

I apologise for not being present at the start of the debate, Mr Turner; we had a little vote at the 1922 committee. When we look at the terrible tragedy that has happened, does the hon. Gentleman agree that the only safe way for people to take forward equity release is to use firms that are part of the Equity Release Council, which holds them to a high standard? In saying that I should declare an interest, because I hold an unremunerated position on the advisory board of the UK Equity Release Council.

[Huw Irranca-Davies]

The hon. Lady is absolutely right to guide people towards good and assured equity release products. Not all such products are bad and nor are all sellers. It is a question of how the products are used and at whom they are targeted—I will come to that in a moment.

How can companies such as Rothschild choose to distance themselves from this matter when the people affected are UK citizens who were sold to by a Rothschild subsidiary based in Guernsey—Rothschild, of course, was established in England two or more centuries ago? It is not good enough for Rothschild to say that the situation is nothing to do with it and that people should take the matter up in the Spanish courts. The hon. Lady’s advice, however, is very good.

We all know who should take responsibility. As we say at home, “Man up.” Rothschild backed these products to the hilt, resourcing and designing them. It lent its name and support to the selling of them. It was party to the flogging of unfit products to unsuitable clients who did not suspect that they were on the back-end of a dodgy scam that was fit for Trotters Independent Traders. At least we could laugh along with Del Boy and Rodney; there is no laughter when my constituents and many others face poverty and hardship in their retirement.

Rothschild and its compliance and legal teams have been robust in disputing the allegations and, indeed, have threatened legal sanctions against those who repeat them. The allegations are very sensitive. When I first raised the matter on the Floor of the House, I received a letter offering a meeting and suggesting that the facts, as explained to me, were “both incomplete and inaccurate”. The letter went on:

“Your statement that Rothschild gave advice and support is factually incorrect.”

I dispute that, as evidenced by my earlier comments and the further remarks to follow.

This debate has obviously caused Rothschild some consternation, as it contacted me yet again to stress that there were “serious factual inaccuracies”. It wrote:

“We trust you understand the importance to us that the position is fairly and accurately portrayed in Parliament.”

Here then is the truth, put fairly and accurately.

Although Rothschild has not provided me with wholly precise figures, it has advised me that just short of 130 loans were provided, of which fewer than 50 were loans to Spanish non-tax resident individuals, some of whom live in the UK. Parliament will note that the reason why Rothschild has those statistics is because a Rothschild product underpins the scam. Let us remember that it disputes that the situation has anything to do with it—it is those pesky intermediaries and savings people. As the now infamous CreditSelect series 4 product is a Rothschild product, I am sure that after this debate Rothschild will be able to provide me and Parliament with the precise figures on the number of loans and the number of people affected who are in this country, along with what the total and the average level of loan debt are for UK citizens, as well as the age profile of those UK citizens. It is a Rothschild product, after all—it is not delivered by Santa or anybody else.

I am fortunate to have seen—indeed, I have it with me—a copy of the presentation pack used back in 2006 to support the sale of these Rothschild products and to train and inform the intermediaries who went on to sell them to unsuspecting victims. It is prominently marked as

“not for circulation to the public”.

Its title is “Rothschild Channel Islands: CreditSelect Series 4 presentation”, and it is by none other than “Stephen Dewsnip, Director”, who as I mentioned earlier has been served a warrant to face charges in Spain.

The first slide—this is not for public consumption, remember—tells aspiring intermediaries and salesmen who want to flog this dodgy deal that Rothschild Channel Islands is the

“premier choice for offshore private banking services”.

That would have been reassuring for the intermediaries, who no doubt repeated the bold claim to future victims.

After detailing the design and extensive back-up for the CreditSelect series 4 product, the presentation lists by name, with phone numbers and e-mail addresses, five Rothschild contacts, including Dewsnip and Coutanche —he was also mentioned in connection with warrants in Spain—who were the guys behind the package. “Contact them,” it says. “You won’t be on your own as intermediaries. Look at this back-up provided directly by N.M. Rothschild and their senior people. They are, after all, the premier choice for offshore banking services.”

The presentation goes on to explain how the initial launch of the product in Spain will be followed by its roll-out in Portugal, France, the UK and so on—how exciting! It explains how Rothschild will instruct the valuer, check the application pack, clarify the details with an independent financial adviser and prepare the credit papers for the Rothschild credit committee, and how the lawyers would be instructed to prepare the legal documents. It goes on to explain the benefits, saying that there is no upper age limit, which is very handy for retired folk, and that no proof of income is required. Of course not; it is the property as collateral, stupid. There is no need to worry if those people are retired pensioners and the property is the only thing they have—if it is their life savings and entire worldly wealth invested in bricks and mortar.

A slide labelled “Key Features” explains that these products are

“Well-structured loan and investment products from excellent brand names”,

and that clients are

“not exposed to unnecessary risks due to Rothschild’s conservative approach”—

there is that Rothschild name being used again as back-up.

Do we really think that the salesmen—the intermediaries —did not go big on the Rothschild name when they were flogging the product? Every single victim says that Rothschild was central to the sales pitch. It was made clear that Rothschild was behind the scheme and was backing the scheme—that it was the scheme. “No worries,” said the intermediaries whom Rothschild were training and supporting to sell CreditSelect series 4.

The main client benefits are listed in the document as an initial cash-back facility, liquidity providing a loan for investment, the prospect of long-term capital growth and tax planning opportunities. That is irresistible for the sales guys and for vulnerable victims, too.

In case anyone was in any doubt about how good the product was and who was backing it, the presentation told us that it was:

“A responsible, competitively priced asset-backed lending facility from a prestigious bank available to Spanish residential property owning clients.”

A “prestigious bank”: Rothschild Channel Islands, established in 1967 in Guernsey; a subsidiary of the Rothschild Group, established in England in 1798 and owned by the Rothschild family, whose motto is “Concordia, Integritas, Industria”, or harmony, integrity, industry. How incongruous that word “integrity” seems in the family motto in light of the action towards my constituents and others.

In case the role of Rothschild in this debacle is not yet clearly established, let me again go back to 2006 when Rothschild was saying this to promote the scheme:

“Our innovative product CreditSelect is available throughout a network of financial advisers around the world, thus giving clients straightforward access to credit”

for a wide “range of purposes”. It also said:

“To help support those professional financial advisory firms with whom we have agreed terms of business for the availability of CreditSelect, we have a website dedicated to assisting the promotion and delivery of the service...This website is regularly updated to ensure that our introducers have round the clock access to all facility documents for downloading and printing…clients brochures, the latest Funds List”.

Fast-forward to 2012 and Rothschild, faced by potential actions in Spain and elsewhere, has changed its tune. It is now saying to complainants:

“Hamiltons”—

that is one of the independent advisers, but you can insert any number of other financial advisers at your discretion, Mr Turner—

“were your financial adviser and acted as your agent in relation to your application for a CreditSelect loan facility, we are not able to accept responsibility for any advice that may have been given to you by Hamiltons”,

or any other assorted intermediaries. That is dissembling and distancing worthy of Pontius Pilate, and it is just as distasteful.

There are all sorts of scams and mis-selling, big and small: from the cowboy builder who sells someone roof repairs that they do not need, to payment protection insurance and mortgage mis-selling. There are real issues of mis-selling, but there are also fundamental issues of trust and integrity. We have seen a practice that can be described as predatory lending. Intermediaries might have laid a trap, but the trap was built by Rothschild. Unless Rothschild and others that are implicated in the scandal step up to the mark and accept their responsibility, this will become the latest chapter of banks and financial houses despoiling the very beds they lie in.

Rothschild’s family empire is estimated to be worth $300 billion to $400 billion. My elderly retired constituents’ net worth was tied up in the property in Spain that the Rothschild group ended up taking. Will the Minister examine the scandal and force Rothschild and the other banks involved to face their responsibility for impoverishing pensioners and to make good their losses? Rothschild can afford to do so; its reputation cannot afford not to. Rothschild has offered to meet me. I will be happy to do so on the clear understanding that I am looking for justice for my constituents and others, not excuses and legal defence.

Annuities for Pensioners

Heather Wheeler Excerpts

Tuesday 7th January 2014 Westminster Hall

[Richard Graham]

My hon. Friend has spent a lot of time working in the sector and knows the issues well. He is absolutely right to highlight the unintended consequence of the retail distribution review, which in a sense is to put people off the idea of buying up-front advice on a complex product such as an annuity. For those who have a relatively small pot of savings, such as £20,000, £30,000 or £40,000—a lot of money for some people—the idea of paying £400 or £500 for advice is not attractive. My hon. Friend is right to highlight that, because it is one of the issues.

I drew attention to the perfect customer for an annuity; let me now give the other side of the coin. By contrast is the customer who is told by the provider of their direct contribution pension—his or her only modest source of savings—that they need an annuity, has no idea what an annuity is and asks the pensions provider what they can offer; who has no idea whether that offer is good, bad or indifferent, goes for the cheaper of the options available, probably leaving out any cover for his or her partner and certainly any provision for inflation, and forgets to mention perhaps a hereditary heart weakness; and who moves from a suburb to the inner city to be closer to shops and a hospital, lives for a few years and then dies, having drawn only a small percentage of income from a capital sum that has now disappeared, leaving their wife, husband or partner on the state pension. For what purpose did he or she save?

With longevity the way it is, we might argue that such a customer scarcely exists, as we would all hope, but the reality is that some of his or her characteristics are a reality—as the Pensions Advisory Service has confirmed—especially in the understanding of what they are buying. Ros Altmann has estimated that insurers will often keep between half and three quarters of a pension fund they take over and convert it into an annuity.

I did a quick reality check on the word “annuity” in a Gloucester pub last weekend. Of the 22 people I asked, six said it was a financial thing like a pension, one of those said it gave income and most of the rest said they had no idea. I accept that it was a bad weekend for Gloucester rugby, and trying to discuss annuities in a pub was pushing my luck, but I do not believe that the people of Britain know what an annuity is or that the average response would be any different. Why is an annuity useful? Do people have to have one? The answer is no. How do they go about getting one? An annuity is potentially the second biggest financial purchase of our lives, so the current state of information about them is worrying.

In any market that size—£12 billion a year is big—if a customer feels that he or she has to buy something but does not really know what it is, the definition of good value is elusive. Customers need a lot of knowledge to pick the right product and the market is dominated by a handful of big names, so there is a danger of high charges, a lack of transparency and inadequate protection. The annuities market more than lives up to all those risks. I rang the Pensions Advisory Service yesterday to get some initial advice—just one man in his 50s ringing in to ask questions about annuities. I got good general advice on a whole number of issues, but when I asked about charges, I was told confidently, “You will never be able to work out what the charges are.” I asked the helpful adviser whether he thought that was right. “Not for me to say,” he replied, which was fair enough. However, it is right for hon. Members to raise and challenge the situation on behalf of our constituents, who ought to know what they are being charged for a product as important as an annuity.

Almost 20,000 of my constituents in Gloucester are between 50 and 64. For all of those people, some understanding of annuities would be useful. It is not good enough to have a product for which people will simply never know the charges. The situation for annuities sits oddly beside that for their stepbrother or sister, the pension. Huge efforts are being made to clarify, and make as simple as possible, all the costs and charges for pensions; to estimate a management fee that is neither rapacious nor drives investment managers to the lowest common denominator; and, above all, to make charges transparent to the client. The status quo is tantamount to an insurance firm—everyone is under the same roof, in the same organisation—saying, “Right, over here is a team of investment managers managing pensions: you need to be squeaky clean, work out all the costs and charges and report them completely. Your margins will be tight. Over here, in this corner, we have the annuities guys: your pricing is roughly what you want it to be, and there is no need to explain or declare anything.” That has to be wrong. When such efforts are being made to ensure transparency about money coming into a pension, it is especially strange that, at the moment, the system does so little for moneys coming out of a pension and into an annuity.

For today’s debate, we have the benefit of the detailed investigations by the Financial Conduct Authority’s consumer panel and The Daily Telegraph. The latter found that differences between annuities offered amounted to as much as £1,444 a year on a pot of £100,000. The FCA’s consumer panel found that commission charges vary by up to £1,000, which might, for the cynical, explain why the industry is so shy when it comes to explaining what the charges are.

The FCA found in general that the industry was “very dysfunctional”, with “possible exploitative pricing”—up to 6% of a customer’s pot could go in commission. In a rebuke to any of us who thought that the answer might simply be to provide more information, the consumer panel found that customers are put off by the mountain of jargon and “information overload”. Frankly, I am irresistibly reminded of the endowment mortgage I was obliged to buy in the 1980s: however it was explained, it was absolute gobbledegook, and there were high commissions, often from one insurer to another. The consumer panel found that 3.5% commission for an introduction from Zurich to Legal & General seemed to be the going rate for annuities today. In the 1980s, if someone wanted to buy a house, they had to have an endowment mortgage. Later on, of course, the fabulous projected investment returns did not materialise, the mis-selling was investigated, fines were levied, the product was binned and the financial sector moved on. Will we see a repeat of that?

I chaired a seminar recently on annuities and asked the Association of British Insurers whether there was a danger of any of its members being sued for mis-selling. There was a long pause before the answer came: “Not yet.” It is therefore not surprising that the FCA consumer panel has recommended urgent regulatory and Government-led reforms to protect and benefit millions of our constituents.

I will turn now to what changes have already been made, and then move on to what could or perhaps should be done next. I start by recognising what the Government have already done. Some of the changes made by the Treasury should have been made a decade ago. For example, it has removed the default retirement age and the effective requirement to purchase an annuity by the age of 75. That is a vital change: it means people no longer have to buy an annuity, and, if they do not, they can take 25% of their savings tax-free and draw an income from the rest. That is a serious option for many people. The starting point of a debate on annuities for every individual should always be whether an annuity will be useful and helpful to them, and what the alternatives are.

There have also been changes to the capped draw-down rules—more jargon, I am afraid, but those rules have been reformed, and that matters within the sector. The Treasury has also encouraged the ABI’s new code of conduct for retirement choices, which has come into play and has made modest steps forward on explanations and general advice, but I do not believe that that is enough. At the same time, the Department for Work and Pensions has promoted open market options and obliged DC schemes to provide what it calls a “wake-up pack” of information, pre-retirement.

[Heather Wheeler (South Derbyshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. On that point, when people previously received their packs on coming up to retirement, there was every chance that there would have been a standard form in the pack from a chosen insurer detailing a chosen product. That has now gone, and people are given a form listing their options and saying where they need to go for each. That is a great step forward.

[Richard Graham]

My hon. Friend is knowledgeable and absolutely right to highlight that all ways of giving people more options and widening the market to give them choice must be steps in the right direction.

The changes that the Treasury has made do not in themselves answer the nub of the issue, as highlighted so well by the FCA consumer panel. The uncomfortable truth remains that very few people understand annuities or make the informed choices that increased choice should enable them to make. They do not understand what they are buying or whether it is the right product for them, and they have no idea what charges are being levied and whether they are appropriate. As the consumer panel concluded, much more needs to be done. The fundamental issues that I flagged up at the beginning of the debate remain unresolved. An annuity is still something that is bought once and that lasts for ever; however, the circumstances of the buyer might change.

I will finish by touching on some of the issues that could and should be addressed. I do not want to make too much of the structure of the market, but it would be interesting to hear the Minister’s views. In a way, an annuity is an offshoot of the pensions sector—it is what happens after a pension—but because it is provided by the insurance sector, it is regulated by regulators that are ultimately responsible to the Treasury. The Pensions Advisory Service is DWP funded; the Money Advice Service is separately funded, and the appointments of its chairman and chief executive are approved by the Treasury, but it is answerable for its strategy to the Department for Business, Innovation and Skills. There is therefore a sense of different advice being offered by different agencies that are responsible to different Departments. That situation does not seem wholly satisfactory to me. It is interesting that the Opposition have today chosen to put up their pensions spokesman rather than someone from their Treasury team.

There is the structural issue of how annuities are regulated and whether the gap between increasing regulation on the pension side, especially in the context of defined contributions and auto-enrolment, could be mirrored by more regulation on the annuities side. I hope that the DWP’s consultation on charges will also shed light on the charges on annuities. Perhaps the Treasury will be able to absorb that when the FCA investigation gets under way.

The broader issues remain, and the nub of the problem is that annuities are unchangeable and inflexible. It is well worth considering the suggestion floated in The Sunday Telegraph by the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb)—that annuities might be changeable when circumstances change, so that they become more like mortgages that may be fixed for a period and thereafter traded or renewed.

A couple of hon. Members have highlighted advice. There is a strong case for believing that annuity brokers are not adding value for customers and that hidden commission should be revealed and consideration given to whether it is appropriate. More specific advice should be offered. When someone rings the Pensions Advisory Service to talk about annuities, they are told straight away that the service cannot discuss an individual’s specific circumstances and cannot access information about their pension or anything else. The advice, although good, is generic, but specific advice about people’s individual situations is most needed and least available.

[Heather Wheeler]

I am delighted that my hon. Friend called today’s debate because I have received a letter from a constituent, Mr Tejpal Singh of Stenson Fields, who asked me to ensure that the House had a debate on annuities, so a new year resolution has been kept. Mr Singh’s point was that people were given specific advice to save and were given to understand that when they took out an annuity at a specific age, the return would be £10,000 or £7,500 a year, but they are lucky to get £4,000 or even £3,000 now. That is difficult for people who have done the right thing on this important cost-of-living issue, but then the market has collapsed. I wonder whether the advice that my hon. Friend is referring to could help with that.

[Jim Dobbin (in the Chair)]

Order. Interventions should be short.