We have just had a short debate on an amendment that was largely focused on clause 1. Before we finish the Commons stages, I want to put a few questions to the Minister, mainly relating to clause 2 and pensions.
We discussed some of these issues in Committee. Clause 2 imposes a levy on the pension schemes to pay for the consequences of the Dalriada case, which means that the pension fund compensation scheme has to raise what Ministers expect to be around £300 million. I have a few questions about that.
My first question is about the flat-rate way of raising such levies. It leaves schemes with large numbers of members, many of whom have small pension pots—for example, those on auto-enrolment schemes—paying a significant proportion of the levy, even though they are run in a completely honest way that has never been near any kind of pension fraud. Have the Government considered a more proportionate way of raising such levies, to protect pension scheme members with very small pots?
My second question is about the relationship between the greater pension freedoms in recent years and the risks of scams and financial fraud. The advent of these freedoms has resulted in a number of examples where unsuspecting pensioners have been persuaded to transfer their pensions in ways that were not in their interests or, even worse, that led to fraud and a loss of their hard-earned savings. The Select Committee on Work and Pensions has shown significant interest in the issue, and it has received estimates from the Pension Scams Industry Group that 40,000 people may have lost up to £10 billion since the pension freedoms were introduced in 2015.
Thirdly, great fanfare was made of advice and guidance when the pension freedoms legislation was introduced, but take-up has been very low, and efforts by the Department to improve it have not radically changed the proportion of people accessing good advice. Without good advice, pension scheme members are left much more vulnerable to unscrupulous sales pitches or, alternatively, bad decisions that are clearly not in their interests but may be in the interests of the financial adviser advising them. What are the Minister and his colleagues doing to change the situation with regard to pensions advice?
Finally, those accessing their pensions under the age of 55 are subject to a hefty tax charge, but sometimes people are persuaded to do this because they are advised that there is no tax charge and they will not have to pay any tax. They then find themselves not just victims of a scam but pursued by Her Majesty’s Revenue and Customs. What can the Minister do to persuade HMRC to take account of the difference between someone acting on false information and someone knowing that they will incur a tax charge? I would be grateful if the Minister could address those questions before we finish.
In my last contribution to the debates on this Bill, I want to thank the Minister and his colleague the Economic Secretary to the Treasury for their consideration of the points that have been raised throughout by hon. Members. I also thank the Clerks and the Bill team for their responses to inquiries. We will support the Bill because we want this compensation to be paid out, but I hope that the Minister will consider some of the questions we have raised about the nature of scams and the need to do more to protect consumers. Although this Bill will go through tonight, I have no doubt that consumer protection, frauds, scams and the amount of things happening online will be raised again when we debate the Online Safety Bill in the weeks and months to come.
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