First, I thank my noble friend Lady Drake for her support on this. Actually, she said it all—ignoring fiduciary duty fails the consumer and the economy as a whole
The Minister has asked what difference the amendment would make. Fiduciary duty does not mean just reasonable care and skill. Fiduciary duty means putting your customer first; not allowing your interest to conflict or to override theirs. The fiduciary duty is quite different from reasonable care and skill. The wording is that these bodies should be subject to a fiduciary duty which they then must provide with reasonable care and skill, but the fiduciary duty is greater than reasonable care and skill. It is about avoiding conflict of interest and about making sure that the decisions you take are in the customer’s interest—albeit the decisions should also be taken with reasonable care and skill.
If I am looking after £1 million of someone’s money, I must put their interest in that money first; and the way I then invest it must be done with reasonable care and skill. That is the extra ingredient that we are seeking to add. Clause 49 by itself—good though it is to include “reasonable care and skill” as it covers financial services—does not include this wider avoidance of conflict of interest, by putting the consumer’s interest first.
No, this will not help get redress. That is not what we are interested in. We want to prevent these things happening. Yes, compensation was paid for PPI—mostly out of the banks’ profits. But that should never have had to be paid—we do not want these things going wrong in the first place. As my noble friend said, rules are not enough; it is a culture change that we need.
We need it written in a Bill that when you are looking after someone else’s money you have a fiduciary duty towards them. There must be some lawyers in the
Chamber tonight. They understand fiduciary duty, but it seems that banks do not. As for the other problem and the question of what difference it will make, we do not just want compensation for consumers. Frankly, I want a few hangings. None of the people who mis-sold PPI is in prison. I do not think that any of those people on whom £1.1 billion in fines have just been imposed will be prosecuted. We need this in a piece of legislation, so that if people break it, they can answer for it.
I therefore hope that, even if I do not push this to a vote tonight, the Government understand that we do not simply want reasonable care and skill. Where people’s life savings—their pensions—are in the hands of someone else, whom they cannot check on because they cannot look at their day-to-day decisions, that person must at every moment put the consumer’s interest first. That was what this amendment was trying to do.
I hope that, even though I will now ask to withdraw this amendment, the Government will look at something that is still going wrong, and will not simply say, “The rules are there and are sufficient”, because clearly they are not. For the moment, I beg leave to withdraw this amendment.