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Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2007

Coming into this debate, I had assumed that we were talking about what was almost a tidying-up exercise and that there were no serious issues of argument in bringing connected travel insurance into the scope of the regulation alongside travel insurance. I was clearly far too naive and had underestimated the ability of the noble Baroness, Lady Noakes, to find fault with this order. The noble Baroness and I agree that the aims of the regulatory regime are worth while, in that it is important that firms are fit and proper and properly resourced; that their staff are competent to undertake the business that they do; that consumers get clear, concise and consistent information about the products; and that if things go wrong consumers are able to seek redress. So far, so good—I suspect that all of us are of that view. The question is then what is the best way of ensuring that that is the case. I was rather surprised to see in the regulatory impact assessment the estimate that currently 25 per cent of policies are mis-sold. That is a very high figure. If it is true—and the statement claims that the figure has been arrived at on the basis of evidence provided by ABTA, the British Insurance Brokers Association and Which?—this is a strong prima facie case for statutory regulation as provided for in the measure that we are discussing today. If we assume that the assumptions are correct, the potential benefits of the measure are significant. I would therefore be grateful if the Minister could reassure me, even if he is incapable of reassuring the noble Baroness, that these figures are robust; the whole case for regulation rests on that. If they are, the case for the order is made. In my experience, insurance connected to travel is not properly taken into account by many vulnerable people who are buying a package with an insurance element attached. I am not thinking of myself; I am thinking of my mother and her friends, who go on coach tours around the UK. I know, because I fill in the forms for her, that travel insurance is attached. I am pretty sure that, by and large, that group of people is not spending a lot of time looking at the travel insurance small print. It is therefore important that they are reassured that that insurance is being sold properly, that they are not being overcharged and that it covers the things that they expect it to. I am supportive of the principle of effective regulation. I am not opposed in principle to this being done via the FSA; that is what the FSA is there for. We have the FSA because self-regulation has frankly failed in many cases. This should be a small addition to the overall work of the FSA. I always share the noble Baroness’s concern when we are adding burdens to the FSA, because it is an overburdened body. However, we are doing so because we have found scandals in the selling of financial service products in area after area. That is why we have so much regulation in this area. It is not a question of the Government, any of the opposition parties or the FSA empire building for the sake of it. It is because consumers have been consistently misled across whole swathes of the population and across a whole raft of financial services products. Therefore, although I share some of the concerns that the noble Baroness has expressed about the robustness of the figures, I do not approach this order with the same degree of scepticism as she does.