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Lord Kingsland: My Lords, I thank the Minister for his reply. The noble Lord will be relieved to hear that I do not intend to speak again to amendments that have been retabled following Committee stage. I would rather leave them where they are to ferment, perhaps steadily improving with age, so that at Report stage the Minister may find them more palatable. I am most grateful to the noble Lord for his response to

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Amendment No. 48 and look forward to receiving his kind invitation, in appropriate copperplate. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 49 not moved.]

Lord McIntosh of Haringey moved Amendments Nos. 50 to 56:


    Page 9, line 9, leave out ("an") and insert ("a controlled").


    Page 9, line 10, leave out ("an") and insert ("a controlled").


    Page 9, line 15, at end insert--


("(9A) An investment is a controlled investment if it is an investment of a specified kind or one which falls within a specified class of investment.").


    Page 9, line 16, after ("2") insert ("(except paragraph 26)").


    Page 9, line 16, leave out ("subsection (9)") and insert ("subsections (9) and (9A)").


    Page 9, line 17, leave out ("that subsection") and insert ("each of those subsections").


    Page 9, line 19, at end insert ("or (9A)").

On Question, amendments agreed to.

3.45 p.m.

Clause 20 [The classes of activity and categories of investment]:

Lord Kingsland moved Amendment No. 57:


    Page 9, line 31, at end insert--


("( ) The activity carried on by way of business of giving or offering or agreeing to give advice (other than legal advice) to persons in their capacity as borrowers or potential borrowers on the terms of a loan or a proposed loan secured or to be secured on land or any other property shall be a regulated activity.").

The noble Lord said: My Lords, as noble Lords are well aware, this amendment is intended to ensure that the giving of advice in relation to mortgages is a regulated activity. Such an activity could be a regulated one if the Treasury included advice on mortgages in the regulated activities order. However, it seems that, at least at present, the Government do not intend that the provision of advice on mortgages should be regulated. This is not satisfactory given that the provision of mortgages is to be a regulated activity. It is not sufficient to rely on mortgage providers, who are to be regulated, to ensure that independent mortgage advisers adopt appropriate standards.

The argument for regulation can be illustrated by asking why someone who advises on an ISA, which may involve a modest investment of only a few hundred pounds, is required to be regulated, while someone who advises on a mortgage, which may well involve a loan of many thousands of pounds, is not. Why should the former be required to carry out a detailed fact-finding of his customer while the latter is not? It is not enough to say that in the case of an ISA it is the customer's money which is being invested whereas in the case of a mortgage the customer is a recipient of someone else's money. The fact is that in the case of a mortgage the customer enters into a very substantial long-term commitment which may have a major impact on his financial position. Nowadays, the marketplace is full of different types of mortgage

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product and the average borrower is in greater, not less, need of help in determining the advantages and disadvantages of particular products.

The impression gained is that the standards of advice are very variable, with many borrowers still entering into quite unsuitable mortgages. The introduction of new standards for mortgages will help but will not provide the complete answer. In our view, it would be a major anomaly if the provision of mortgage advice was not part of the new regulatory regime from the outset. The amendment is intended to remove that anomaly. I beg to move.

Lord Newby: My Lords, in Committee we moved three amendments relating to mortgages which covered two issues: first, what was meant by "a mortgage"; and, secondly, what a mortgage could cover. My noble friend Lord Sharman described in graphic detail mortgages on boats, caravans and various other categories of property which are as important to the person who holds the mortgage as the person's home. We believe that the question of the inclusion of those mortgages in the remit of the Bill may be dealt with in regulation and that the Government accept that they are just as important as mortgages on houses. On that understanding, we have not retabled the amendment.

As to advice, we tabled an amendment which in many ways mirrored the amendment which has been moved by the noble Lord, Lord Kingsland. In Committee, the noble Lord, Lord Burns, explained why the Joint Committee believed that mortgage advice should be included in the scope of the Bill. We still believe that at some stage the FSA may wish to look at the regulation of mortgage advice, but it has been borne in upon us that the other category of advisers not covered by the Bill is insurance brokers. We believe that there is an illogicality in formally including one and not the other. Therefore, in relation to advice, at this stage we do not table an amendment similar to that tabled in Committee.

Lord Elton: My Lords, I am sorry that the noble Baroness, Lady Turner, is not present. She is at least with us in the spirit of the terms of Amendment No. 59.

It seems extraordinary that regulation of advice for the most important financial decision that many people will take in their lives should be left to subordinate regulation or made the responsibility of a body other than the FSA. The commitment to a mortgage often outlasts the commitment even to a life insurance policy. It determines the manner of life of many people. We have seen recently how people who have been wrongly advised have overcommitted themselves to a mortgage and have been caught in the negative equity trap. If there is any purpose in having the Bill so far as concerns the private citizen, this is an area of the most important sensitivity. Therefore, I support my noble friend. I hope that he does not let the matter drop.

Lord Jenkin of Roding: My Lords, I add my voice in support of the amendment. For a long time there was

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a great sense of injustice that life insurance companies were subject to the full rigours of the then regulatory system whereas building societies--in many cases they were involved in far larger financial transactions than those for life or pension policies--were not. That situation has changed; and I welcome it. It was an unfair form of competition. The full rigours of the regulatory system applied to selling life insurance but not to selling mortgages.

However, the Bill has only gone half way. Many of the products are promoted by advisers even though the mortgage product is provided by the building society, bank--or whoever it may be. It is upon the person with whom the public has the face-to-face contact that the regulation should bite. The broker may be able to offer a range of products from different providers. But in the end it is probably on his or her advice that the punter finally decides to move forward; and it may be bad advice. There are many reasons why that may be so. I do not need to go into them now.

As my noble friend from the Front Bench said, it is extraordinary that the Bill moves only part of the way. Many people believed that if we were to have a system of regulation, it should surely cover, as my noble friend Lord Elton said, the largest single transaction that most people are likely ever to take on in their lives. With respect, it is unfair that the providers of mortgages should have to second-guess the advice of the brokers because the brokers are not regulated or subject to the regime established by the FSA; and that in order to protect themselves the building societies will need to go much further into the circumstances of the individual borrower than they might if the process were properly regulated from beginning to end.

If my noble friend receives what I suspect will be a somewhat unsatisfactory answer from the Minister, I, too, hope that he will take the matter further. It is a curious lacuna in the Bill. I am at a loss to understand why the Government are so reluctant to move this last stage.

Baroness Oppenheim-Barnes: My Lords, I support my noble friend's amendment and all who have spoken in favour of it. No doubt the noble Lord, Lord Borrie, waits to intervene in support. He knows as well as I do that this area is something of a jungle for consumers.

There is a good deal of wise advice available, but it varies, as my noble friend said. Brokers are, after all, brokers; they have a job to do which they see in one light. I do not blame the providers of the mortgages, but the variations are great. Consumers are entering a jungle; they are not confident; they are confused. The amendment seeks to ensure that the advice they receive is bona fide: that there is no unacceptable variation.

I hope, therefore, that my noble friend will not let the matter drop. The issue is important for consumers.

Lord Boardman: My Lords, I strongly support the amendment for the reasons outlined by noble Lords on this side of the House.

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There is no numerically larger group in the community than mortgagors. No group needs wise advice more than they do. Often a mortgage may be the only investment they have made and they want the best advice they can get in order to invest wisely. I urge the Minister to accept the amendment moved by my noble friend and to allow mortgages to be covered by the safeguards provided in the Bill.


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