Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to paragraph 2.182 of Budget 2020, what the timeframe is for the publication of the call for evidence on pension administration.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government recognises the different impacts of the two systems of paying pension tax relief on pension contributions for workers earning below the personal allowance. At Budget 2020, the Government announced a call for evidence will be published on pensions tax relief administration, in line with our manifesto commitment to comprehensively review this issue. In the light of COVID-19, the Government is considering the publication of this and other Government documents on a case by case basis, taking into account the impact of COVID-19 on stakeholders, and will provide more information on the timeframe for publication of this call for evidence in due course.
The Government has sought to support low earners through a range of measures, including increasing the personal allowance to £12,500 and committing to a new ambitious target for the National Living Wage.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he is taking to support economic recovery in Wales after the covid-19 outbreak; and whether he plans to introduce the Shared Prospeity Fund to help aid that recovery.
Answered by Kemi Badenoch - President of the Board of Trade
The Treasury’s priority is to support the whole UK economy through the immediate crisis – including in Wales. We have taken unprecedented steps to keep as many people as possible in their existing jobs, support viable businesses to stay afloat and protect the incomes of the most vulnerable. These measures aim to protect the productive capacity of the whole UK economy and to enable a strong and sustainable recovery from this crisis.The government will use the UK Shared Prosperity Fund to level up opportunity in each of our four nations. This means investing in people, improving their life chances. The government will set out plans for the Fund in due course.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what plans he has to raise professional indemnity cover limits which independent financial advisers are required to have to practise.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The requirement for Independent Financial Advisers (IFAs) to hold adequate Professional Indemnity Insurance (PII) cover is an important element in protecting consumers who receive financial advice. The Financial Conduct Authority’s (FCA) handbook sets out the various requirements around the PII cover that IFAs are required to hold.
There is no intention to raise the minimum PII cover levels for IFAs at present. The minimum limit of indemnity of PII is specified by FCA rules and European legislation such as the Insurance Distribution Directive (IDD), depending upon the type of IFA. The UK is no longer a Member State of the European Union. However, both the UK and the EU are committed to a period of transition – lasting until the end of 2020 – where common rules for businesses and consumers will remain in place, including the IDD.
Many IFAs are in scope of the IDD, because they undertake life assurance type transactions. IDD limits are reviewed every five years via regulatory technical standards and were last reviewed in November 2019 and the revised limits, which have increased slightly, will apply to IFAs that are IDD firms from 12 June 2020.
The FCA are continuing work to examine consumer harms, and potential claims that may arise from certain business activities carried out by IFAs; and these findings may prompt a further examination of the minimum levels of indemnity in the future.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will take steps to introduce penalties in respect of negligent independent financial advice on transferring pensions.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government works closely with the Financial Conduct Authority (FCA), the independent financial services regulator, to ensure that the market for pensions advice works fairly.
The FCA already has considerable powers to take enforcement action where consumers are harmed by poor financial advice and where an FCA authorised firm has breached FCA rules. The FCA has the power to impose a range of sanctions, including fines on firms or individuals, requirements to carry out redress exercises, and bans on firms or individuals. There are currently no plans to introduce further penalties in respect of negligent pensions transfer advice.
If the FCA suspects that criminal fraud has been committed, the FCA will refer the case to the relevant authorities for further action to be taken. The FCA can also take action through the courts against firms or individuals who carry out regulated activity without authorisation.
The FCA have recently consulted on a number of interventions in the Defined Benefit (DB) pensions transfer market to reduce the number of consumers transferring their pensions when it is not in their best interests. The FCA are in the process of considering the feedback they have received and plan to publish a Policy Statement on the outcome in the first quarter of 2020.
In addition, the Department for Work and Pensions are introducing legislation, through the Pension Schemes 2019-20 Bill, to allow regulations to be made to stipulate the destinations and circumstances under which a pension scheme member will have a right to transfer their pension savings to another pension scheme. This will further protect members from pension scams by helping trustees of occupational pension schemes ensure transfers are made to safe and not fraudulent schemes.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, by what date his Department plans to implement proposals of the Mineworkers' Pensions Scheme on the long-term protection of pension bonuses for members of that Scheme.
Answered by Rishi Sunak - Prime Minister, First Lord of the Treasury, Minister for the Civil Service, and Minister for the Union
A decision on the changes has been taken and we will communicate this to interested parties shortly.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will publish the expenditure of Government receipts from the Mineworkers' Pension Scheme surpluses disaggregated by area of expenditure in (a) 2015, (b) 2016, (c) 2017 and (d) 2018.
Answered by Rishi Sunak - Prime Minister, First Lord of the Treasury, Minister for the Civil Service, and Minister for the Union
Receipts from the Mineworkers’ Pension Scheme come into the Consolidated Fund and are then spent on the provision of public services. We therefore cannot track specific receipts to expenditure.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the Financial Conduct Authority survey of defined benefit pension advice published on 19 June 2019, what assessment his Department has made of the effectiveness of advice provided by the financial services industry on the potential merits of transferring out of defined benefit pension schemes.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government is committed to working with the Financial Conduct Authority (FCA), the independent financial services regulator, who are responsible for ensuring that the financial advice market works well, competitively and fairly. The Government has established a strong regulatory framework to enable the FCA’s work.
In November 2018, the FCA requested data from every firm with permission to advise on defined benefit pension transfers, which provided them with a full picture of the market from 2015. In publishing the data in June 2019, the FCA raised concerns that firms are recommending that large numbers of consumers transfer out of their defined benefit (DB) pension schemes despite the FCA’s stance that transfers are likely to be unsuitable for most clients.
Although the data are not an assessment of the suitability of advice, they give the FCA the information they need to focus their supervision work. The FCA will be writing to all firms and started visits to the most active firms in the market, with a view to complete a full assessment of the firms’ approach to DB advice, focusing on key aspects of firms’ business models and processes which could give rise to harm. The FCA will not hesitate to use their investigatory powers where they identify evidence of misconduct which could have caused harm to consumers.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, when he plans to respond to the open letter of 11 April 2019 on the Mineworkers' Pension Scheme ;and if he will meet with the signatories of that letter.
Answered by Elizabeth Truss
I have responded to the letter dated 11 April 2019 as the Minister responsible for the scheme. Discussions with the Trustees of the Scheme are ongoing about possible changes that would benefit all parties.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effectiveness of current (a) legal (b) administrative and (c) financial penalties for the provision of poor pension transfer advice.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government is committed to working with the Financial Conduct Authority (FCA), the independent financial services regulator, to ensure consumers have access to high quality financial advice. The FCA is responsible for ensuring that the financial advice market works well, competitively and fairly. The Government has established a strong regulatory framework to enable the FCA’s work.
The FCA has considerable power to take action where it sees evidence of poor pension transfer advice. For example, they may impose a financial penalty on firms or individuals, require the firm to pay redress to its customers, place restrictions on the firm’s permissions or prohibit individuals from operating in financial services.
Asked by: Nick Smith (Labour - Blaenau Gwent)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of amending the trivial commutation and small pots rules to require insurers to commute annuities into lump sum payments for consumers; and if he will make a statement.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The small pots and trivial commutation rules are permissive sets of tax rules which pre-date the pension freedoms reforms introduced in 2015. The rules may allow an individual to access their pension as a lump sum if they are at least 55 years old, or retiring at an earlier age because of ill-health, and the value of the payment does not exceed £10,000 for small pots, or £30,000 for trivial commutation. The rules limit what arrangements can be accessed in this way.
As the regulations are permissive, there is no obligation on providers to offer small pot lump sums to consumers. The Government has no plans at present to amend existing legislation to require insurers to commute annuities in payment.