Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2009

I thank the Minister for introducing the order, to which we will not object. The Government asked the OFT to look at the sale and rent-back market and have based their solution on the advice from the OFT. They have consulted, so they cannot be faulted on those grounds. However, I have to say that I have a tinge of regret that we are unleashing the full might of the FSA’s regulatory powers on a relatively new market, which is of indeterminate size but is certainly highly fragmented, and about which—as the OFT study revealed—we know relatively little. My concern is that the costs, which are estimated at £8,000 on a one-off basis and £20,000 per year thereafter, may well deter providers of sale and rent-back products. The Treasury impact assessment is based on 1,000 providers and 5,000 transactions a year—that is, on average, five transactions per provider. If you have to recoup in year one both the set-up and the ongoing costs, you have to recoup more than £5,000 per transaction on average. We have to bear in mind that these transactions concern relatively small amounts and certainly involve homes lower down the valuation scale. I do not doubt that there have been circumstances in which owners of property have entered into unwise transactions, possibly induced by purchasers to sign up to terms which were unduly favourable to the purchaser and unfair to the owner of the property. However, it is clear from the OFT report that sale and rent-back products can in fact be a suitable response for some people, especially those who are already over-borrowed but who place a high value on remaining in their own home. These are not people who would benefit from the mortgage protection schemes and the like to which the Minister referred. Their problems are too deep-seated to be dealt with by those sorts of protections. The impact assessment has an impossibly wide range of costs and benefits of the regulatory solution in the order—between net costs of £953 million and benefits of £1,327 million. The Treasury is to be commended for its honesty in revealing the wide range of potential outcomes, but this underlines—for me, at least—the difficulties that we have in justifying a regulatory solution. I instinctively fight shy of a regulatory solution if another solution can be found. I accept, though, that on the basis of the work that is done by the Treasury, no satisfactory self-regulatory system seemed to be available. There is evidence that some consumers have been harmed by sale and rent-back products, but precious little evidence, anecdotal or otherwise, to weigh in the balance on the other side. My final set of questions to the Minister concerns the future of regulation. We constantly add regulated activities to the FSA, but I do not think that we ever take them away. Will he say whether the Treasury and/or the FSA believes it appropriate to look at the regulated activities that are accreting in the FSA to see whether they continue to be justified over time? More specifically, does either the Treasury or the FSA believe that it should review the power that has been added in the light of the difficult evidential base behind it and the understanding of what the consequences of regulation might be? Does the Treasury believe that a review would be appropriate after a number of years to see what the impact of this power has been on the availability of finance of different kinds to homeowners? There is a danger that well-intentioned regulation—this is clearly that—could actually kill the market for sale and rent-back entirely, and I am by no means convinced that that is the right outcome for all consumers.