HISTORIC PRESS RELEASE : Helen Liddell gets tough with pension companies [November 1997]

The press release issued by HM Treasury on 18 November 1997.

A package of sanctions aimed at maintaining the pressure on pension firms to meet their targets for resolving pensions mis-selling cases was outlined today by the Economic Secretary, Helen Liddell in a statement to the House of Commons.

Mrs Liddell said the measures were to ensure that such a scandal never happened again and that those who suffered can now look to speedy redress. She said:

“Justice for them has been too long delayed. This Government is determined to ensure it is delivered.”

The Minister said that while some companies had made some progress in resolving cases, there was still a long way to go. Publishing the table of the progress of the top 41 companies, she said:

“Far too many firms across the industry – from big insurance companies to small independent financial advisers (IFAs) – have been far too slow to act. Some firms have hardly started. They have not yet grasped the severity of the situation.”

The Minister stressed that the most pressing challenge for most of the companies was to complete 90 per cent of the highest priority cases, due by the end of December. Looking further ahead, she announced that once they had hit their second targets, due at the end of 1998 at the latest, their names would be taken off the list that is published every month.

Mrs Liddell drew attention to the recent use by the regulators of their powers to fine and censure firms. Rigorous discipline would continue, however for some firms a stronger armoury was called for. Under a new regime of individual registration with the Personal Investment Authority (PIA), due to come into force next year, individual directors, managers or sales staff found at fault could be liable to fines, reprimands or restrictions on the type of work they can be involved in.

The Minister noted that the PIA can require firms to advertise their misconduct and the grounds on which they are disciplined.

The Minister said:

“The Government believes that the time has come for a whole range of sanctions to come into play.

“The only way for a firm or an individual to avoid disciplinary action is to avoid the conduct which warrants it.”

Mrs Liddell said that she would continue to look for ways to maximise pressure on the industry. The PIA is currently exploring how to inform customers directly of firms’ misdemeanours.

She urged the industry to act quickly to restore confidence. Evidence of firms putting investors at risk would be acted upon. This might include:

• use of the PIA power to put firms out of business where compliance is so poor that investors are put at risk. This could include firms or IFAs using the review process to sell more products to customers; and
• taking action to exclude senior people who are not fit and proper from involvement in financial services business or to remove them from their posts.

The Minister also said that firms’ records on settling pension cases could be taken into account in future policy decisions on stakeholder pensions and individual savings accounts. She said:

“We anticipate that future decisions on the regulatory approval of stakeholder pensions would take into account the conduct and corporate governance of those involved. This would include, of course, their record in settling cases of mis-sold personal pensions.”