Orders of the Day — Regulation of Financial Services (Land Transactions) Bill

House of Commons, 23 June 2005.

Ivan Lewis (Labour, Bury South)

I beg to move, That the Bill be read a Second time.

I begin by apologising to the House that I have to leave after opening the debate to attend a family wedding. The Conservative party has been generous in understanding that. The Chief Secretary will remain throughout the debate, and will close it ably and effectively. [Interruption.] I am always nice about the Chief Secretary.

I am delighted to bring the Bill before the House. In doing so the Government are fulfilling a commitment made in May 2004 to bring home reversion plans into statutory regulation by the Financial Services Authority. To buy a home reversion plan is a huge financial decision, involving the most important and sometimes only significant asset of elderly people. In addition, it can have significant implications for tax, benefits, inheritance and long-term financial planning, which need to be considered carefully. Regulation is facilitated by the Bill and is not designed to discourage people from purchasing such products. It will help people make informed choices, offer valuable consumer protection and ensure that there is a level playing field in the equity release market. Most of that already falls within the scope of FSA mortgage regulation.

Furthermore, the provisions will ensure that those who are uncomfortable about taking out interest-bearing loans, such as Muslim consumers, can access the growing market in sharia-compliant home finance products while benefiting from the protections afforded by the FSA regulation. The Bill has been introduced to meet the needs of consumers, but also at the behest of the industry, which has welcomed the news that the Government are to legislate to level the regulatory playing field in this area.

Michael Fallon (Conservative, Sevenoaks)

I thank the Minister for giving way so early in his speech. He says that the Bill will be of benefit to consumers. Will he confirm that his own regulatory impact assessment says that the measure will cost £11 million immediately and will have an ongoing cost of £5 million a year? Is that not exactly the kind of over-regulation about which the Prime Minister was complaining?

Ivan Lewis (Labour, Bury South)

I refute that suggestion. These measures are supported by the organisations that sell the products, and by consumers. Surely we have a responsibility to protect consumers, particularly vulnerable consumers, many of whom are older people. They require protection by the FSA. The hon. Gentleman is out of touch if he regards the measure as an example of over-regulation. There is a consensus that it is effective and sensible.

On 17 May in The Financial Times, Jon King, the chairman of Safe Home Income Plans, whose members include the vast majority of home reversion lenders, said:

"I'm delighted this has come so soon. People should now feel safe that these schemes are worth considering. Regulation means that people will be compensated if sold the wrong plan."

Jon King is far more in touch with these issues than the hon. Gentleman.

Hon Members will find it useful if I take a moment to clarify what home reversion plans do. At base they are simply a form of equity release scheme—financial products that allow home owners to release the value of their property above any amount over the mortgage. Equity release schemes involve a provider giving the home owner a lump sum, income or both on the basis of the value of the home, while allowing home owners the right to continue to live in the property. Providers receive their returns when that home is sold. These schemes are generally sold to the over-60s and they provide a valuable means for pensioners, who may be cash poor, to realise some of the value that they have locked up in their homes and so improve their standard of living.

The products are not simple to understand. Realising a cash lump sum or income by equity release can have complex implications for pensioners' tax and benefit situation. Hence the need for regulation to ensure that potential purchasers of equity release schemes receive an appropriate level of advice.

There are two basic types of scheme: mortgage-based schemes or lifetime mortgages, and reversion plans. The clear difference between the two is that in mortgage-based schemes the householder retains ownership of the property whereas in reversion plans the reversion provider becomes the owner of whatever proportion of the property is sold. In mortgage-based equity release schemes, also called lifetime mortgages, home owners take out a loan secured on their property, but with the interest on that loan becoming payable when the house is finally sold, either on death or when the owners move into long-term care. These products are currently regulated by the FSA. In a home reversion plan, home owners sell all or part of their house at a discounted rate in return for a lump sum and/or income, and continue to live in the house rent free or for a peppercorn rent for life. The amount paid to the house owner is based on a number of factors, including the value of the property, the proportion of the property sold, the life expectancy of the owner, long-term interest rates and expected house price inflation. These plans are not currently registered by the FSA.

The other products that the legislation is designed to bring within the scope of regulation are ijara home finance products. These are two main types of home finance products in the United Kingdom.

Henry Bellingham (Conservative, North West Norfolk)

There have been reports in the press of relatives who had been expecting to inherit the home getting upset when their interests are not properly protected. Obviously it is important that people who want to take out an equity release scheme should be able to do so, but what is his advice to relatives, who in some cases have ended up suing solicitors and other professional advisers?

Ivan Lewis (Labour, Bury South)

I cannot comment on individual cases: it depends on the circumstances. Most older people are perfectly able and sufficiently lucid to make judgments about what they want to do with their assets. Obviously, if financial advisers or others are seeking to exploit and abuse these situations, it is right to ensure that we have a level of regulation that is appropriate in the circumstances. From that point of view, I welcome the hon. Gentleman's intervention. He makes the point that FSA regulation would give enhanced protection. That is important. As I said, there is a consensus that this is appropriate, not excessive, regulation.

Julian Lewis (Conservative, New Forest East)

I am a little concerned about the case of some of my constituents who are involved in some specific equity release schemes—involving Barclays Bank, if I remember correctly—whereby if they wanted to sell the property if their circumstances changed, they would have to part with something like three quarters of the increase in the value of the property. They were not paying interest; they entered into this deal instead. Such schemes have been discontinued, but some people are effectively trapped in homes they cannot sell because the vast amount of increase in the price would go to the company that gave them the interest-free loan against the equity of the property, and they could not find another more suitable property. Are the Government proposing to do anything to help those people out of the trap in which they find themselves caught?

Ivan Lewis (Labour, Bury South)

The hon. Gentleman understands that we cannot introduce retrospective legislation, but we sympathise with people who find themselves in such circumstances. If is incredibly difficult to help people if those transactions were perfectly lawful, even if they have had unintended consequences. The hon. Gentleman mentioned Barclays bank, and if he feels that it has behaved unreasonably, he should take the matter up directly with its senior management on his constituents' behalf.

Two main types of home finance products are currently aimed at meeting the religious needs of Muslim consumers in the UK. The first, murabaha, involves a financial institution purchasing the chosen property and then selling it immediately to an individual at a higher price. The higher price is then paid back on a monthly basis to the financier over a period of up to 15 years. Those products are already covered by FSA regulation.

The second type, ijara, involves a financial institution purchasing the chosen property, at which point the individual agrees to pay back the exact purchase price either over a period of up to 25 years or at the end of the payment term. Ownership of the property remains with the lending institution until the payment term is up. The individual pays rent to the financial institution over the payment term and becomes the owner of the property once the purchase price paid by the financial institution is repaid. The financial institution makes its profit from the rent paid, which is seen as a fair payment for use of the property rather than a charge for borrowing money. That arrangement is not currently covered by FSA regulations.

Sadiq Khan (Labour, Tooting)

I recently chaired a meeting in the House hosted by the Muslim Council of Britain and attended by some of the world's leading sharia finance experts. Does the Minister agree with those experts that the UK leads the western world in the provision of sharia-compliant financial services? Does he also agree that the Bill will ensure that those of our citizens who choose sharia-compliant products get the same protection as other consumers?

Ivan Lewis (Labour, Bury South)

I agree with my hon. Friend and pay tribute to his work in raising the profile of these issues and ensuring that the Bill responds sensitively to consumers' needs.

The Bill will remove the current imbalance between the regulation of murabaha products and the lack of regulation of ijara products. It will ensure proper protection for all consumers who choose to use non-interest bearing products for reasons of conscience—other consumers may feel the same way as members of the Muslim community about such products.

The Bill will allow us to bring flexible tenure products into the scope of regulation, if that becomes necessary or desirable in the future. At present, providers of such products are exempt from FSA regulation, as they are registered social landlords. In response to the consultation, however, we have undertaken to consider the regulation of those products, if private providers enter the market in the future. Any action to introduce regulation in that area would be subject to a rigorous cost-benefit analysis and would require secondary legislation. I hope that hon. Members now have a clearer picture of the characteristics of the products that form the focus of the Bill.

The FSA assumed responsibility for the regulation of first-charge mortgages secured on a purchaser's primary residence from 31 October 2004. The Government's decision to regulate in this area was announced by the then Economic Secretary in December. The decision was taken to ensure that people had adequate protections when they made what for many is one of the most significant financial decisions of their lives. The size of most mortgage loans, combined with the long repayment cycles and the fact that default can mean the loss of family homes, means that they are qualitatively different from other common financial products and as such require particularly rigorous and careful regulation. The Government's decision to regulate was broadly welcomed by both the industry and consumer groups.

Nigel Dodds (DUP, Belfast North)

I welcome these sensible regulatory measures, but I seek clarification. Will all the provisions apply directly to Northern Ireland or will further secondary legislation be required?

Ivan Lewis (Labour, Bury South)

The contents of the Bill will apply to Northern Ireland.

With FSA regulation, lenders and intermediaries are required to provide a high standard of advice to the tens of thousands of people who take out mortgages every year, which should help avoid mis-selling scandals in future and allow consumers to make informed choices about the mortgages that are best for them. Informed and confident consumers should in turn support the stable future development of the UK's diverse and competitive mortgage market. The Bill seeks to extend those benefits of regulation.

As I have said, neither home reversion plans nor ijara home finance products are currently regulated by the FSA. Those products are not currently specified as regulated activities pursuant to the Financial Services and Markets Act 2000. Of course, the fact that activities relating to reversion plans are not currently specified as regulated activities does not mean that there is not still scope for abuse. Indeed, given that these products, by their very nature, are aimed at sometimes vulnerable people, it is clear that we have a particular responsibility. Not only is there a risk of mis-selling—we must remember that these products are not simple to understand and that they can have complex interactions with pensioners' benefit entitlements—but there is currently a lack of redress if things go wrong.

I should not paint an incomplete picture for the House, because consumers of home reversion plans are not completely without protection at the moment. The home reversion market is subject to voluntary regulation through safe home income plans. Members of SHIP agree to comply with a code of practice and undertake to provide a fair, simple and complete presentation of any plan they offer. They also offer a guarantee that consumers will never owe a lender more than the value of their home, which is known as a no negative equity guarantee. However, those protections are a long way short of the protections offered by statutory regulation and the FSA's regime. Lifetime mortgages, which in effect are very similar products to home reversions, provide a clear model for what FSA regulation of home reversion plans might look like. They are considered to be high-risk products and are accordingly subject to rigorous rules.

The sort of rules that one would expect to see the FSA apply to home reversion schemes under the powers granted by this Bill include rules to ensure that providers must advise of risks as well as benefits when advertising reversion schemes; rules on advice to consumers which would ensure advisers considered implications for tax and benefits, as well as matching the consumers overall needs and circumstances to product features; and a requirement for firms to issue key product information to consumers in a clear and understandable format. Furthermore, FSA regulation will offer consumers access to the financial ombudsman service in the event that they wish to make a complaint, and it would also provide cover under the financial services compensation scheme. None of those protections is currently available to purchasers of home reversion schemes, which not only leaves elderly people in all our constituencies at risk of mis-selling, but creates a distortion in the equity release market and opens the door for confusion among consumers as to what is FSA regulated and what is not.

The industry has been a keen proponent of regulation for reversion plans in order to remove any consumer confusion and to boost consumer confidence in the equity release market as a whole. Although the market in home reversion products grew by 13 per cent. in the first quarter of 2005, it remains small at less than 3 per cent. of the total value of lending in the equity release market. FSA regulation is seen by many industry participants as a prerequisite of further expansion of this market. By boosting consumer confidence, it will ensure potential demand is realised, and by securing the reputational risk of reversion providers, it will encourage more players to enter the market.

Having set out clearly where the Government see the benefits of extending FSA regulation in the way the Bill proposes, I should stress that we have arrived at a balanced view of the overall benefit of regulation following extensive consultation. In line with the Government's general commitment to better regulation, we have sought to ensure that the changes proposed by the Bill are necessary, and the costs justified. Our consultation exercises have demonstrated overwhelming support for the measures.

As I am sure hon. Members will have noted, the Bill is extremely short and very simple, weighing in at only two clauses. Many of us would welcome other Bills of a similar nature. The legislative background to the Bill is that in order for an activity to be regulated, it must be carried on by way of business and specified in an order made under section 22 of the Financial Services and Markets Act 2000. Schedule 2 to that Act sets out in broad terms the kind of activities and investments that can be specified in an order made under section 22. Although it includes loans secured on land or standard mortgages, it does not cover other types of finance provided in connection with the acquisition or disposal of land.

If, as I sincerely hope, the House sees fit to support the Bill, secondary legislation would be brought before the House in the form of an affirmative resolution statutory instrument which would precisely define the products and activities that would be regulated by the FSA in future. It is the Government's stated intention to consult publicly on the content of that secondary legislation to ensure that it is properly targeted and effectively focused. In addition, the FSA will consult publicly on the detailed rules that would apply to these products.

There is no reason to believe that any future regulation of home reversion plans and ijara products would be very different from that already in place for lifetime mortgages and murabaha products. However, it is important to note that the FSA is obliged to take account of the particular features of each product it regulates and to ensure that the rules it applies are proportionate to the risk posed.

I hope I have gone some way towards convincing hon. Members of the considerable merits of this Bill; it will be up to my right hon. Friend the Chief Secretary to finish the job. The Bill will extend important consumer protections to vulnerable and minority consumers, level the playing field in mortgage regulation and ensure that there are no artificial distortions, and bolster consumer confidence in these products and so help to ensure that their markets continue to develop. It has found strong support among consumer groups and industry alike, and I hope that it will garner support from all Members who contribute to the debate. I commend it to the House.

Mark Field (Conservative, Cities of London and Westminster)

One might assume that Treasury Ministers and I would have approached this debate with a somewhat heavy heart, as there must surely be better ways of spending a sun-drenched Thursday afternoon than debating an uncontentious—or relatively uncontentious—Bill such as this. Our cheerful countenance owes more to the fact that the alternative attraction for us this afternoon would be poring over yet more clauses of the Finance Bill in Committee. Make no mistake, the lottery of parliamentary timetabling sometimes produces winners.

I am delighted to lead for the Opposition on this Second Reading debate. I welcome the Chief Secretary to his place in the Government's Treasury team. As was pointed out earlier, he is deputising—if that is the right word—for the Economic Secretary, who is attending his sister's wedding. My only hope for the rest of the Lewis clan is that he will not make a long speech at that happy family occasion, or if so that equity release and home reversion schemes will not feature as part of it.

In this illustrious Treasury team there is also a Financial Secretary who, with a name like Healey, was always destined to make his name in that great Department of State. But to really get on, as the Chief Secretary will confirm, he will need to change his name by deed poll to Brown. For my part, at 40 in this relatively youthful shadow Treasury team, I am something of a veteran, in age if not experience. As someone who is already over the hill, I am a warning to all new Members present about how quickly one goes from being a young Turk to an old stager.

Let me get on to the business. I should say at the outset that, in principle, Conservatives support the proposals in the Bill. We welcome any move that will increase public confidence in home reversion or equity release schemes, which have been the subject of a stream of adverse publicity in the financial press over recent years. We accept the proper desire of Government to facilitate consumers making better, more informed choices and to create a level playing field in this rapidly evolving market. As life expectancy increases, Conservatives welcome innovative new ways for people during their lifetime to utilise the equity that they have accumulated in their main residential home. As the Minister said, this should help the elderly to live with dignity and independence. Naturally, we shall want during the passage of the Bill to examine the proposals carefully to ensure that any new rules are not overly complicated and achieve their goal with the minimum of regulatory burden. Above all, we need a flexible approach.

Michael Fallon (Conservative, Sevenoaks)

Everybody seems to support the Bill, but I hope that one of the aspects that my hon. Friend will keep under review when it comes to the detail is that the cost should be proportionate. It seems to me that £11 million as a one-off cost is a huge amount of money.

Mark Field (Conservative, Cities of London and Westminster)

I entirely accept my hon. Friend's concerns. I assume that he is not making a bid to serve on the Bill Committee, as despite the Bill's having only two clauses, proceedings might take longer than we had in mind.

As the Minister pointed out, the Financial Services and Markets Act 2000 provides consumer protection by defining a "regulated activity" in the United Kingdom. The purpose of the Bill is to bring home reversion schemes under the umbrella of section 22 of that Act, which covers contractual rights in respect of loans secured on land, but not other types of finance provided in connection with the acquisition or disposal of land.

As hon. Members will be aware, the Financial Services Authority has regulated activities relating to mortgages since last October. That reflects the reality of the world in which we now live, for the initial exclusion of mortgages from financial services oversight seemed strangely perverse. After all, for the vast majority of the population mortgages are the largest single financial investment they are likely to make in the course of a lifetime. Buying an equity release scheme has financial planning, tax and inheritance implications, and the group most at risk is the elderly.

In due course, I want to deal with a few of our concerns about the operation of the Financial Services Authority, especially in the light of—how should I put it?—creative tensions between the Prime Minister and the Chancellor on its role and importance as regards the global competitiveness of the UK financial services sector.

I want first to make some observations on the contemporary importance of these schemes. Equity release allows a home owner to sell all or part of his or her house at a discounted rate to a regulated provider in return for either a lump sum or income while continuing to live in the house rent free for life. There is little doubt that such schemes will become increasingly prevalent. That fact alone should never be regarded as a reason in itself to regulate, but it is important that we examine equity release schemes in the context of fast-changing demographics. However, in regulating we must not stifle innovation and flexibility, which I hope will continue to be the watchwords of success in the financial services field.

Thankfully, people are living longer. Countless millions of Britons are building up personal wealth, predominantly in bricks and mortar, in a way that was unthinkable only a generation ago. Many, as they get older, are naturally reluctant to sell off a long-cherished family home full of memories of a life well lived. Similarly, others wish to avoid the disruption and displacement of a house move in later life. Nevertheless, as pensions returns—whether state, occupational or personal—become ever more unreliable, there will be an increasing clamour from home owners to utilise some of the equity they have in their home to cover the cost of day-to-day living.

That, I suspect, will not apply only to the retired or semi-retired. I think that in many ways it is a welcome trend. I must confess that I have always been a little uneasy about forcefully defending either side of the argument in the debate on the funding of long-term residential care for elderly home owners. The current arrangements allow only a very small holding of financial assets before deductions on a pound-for-pound basis for the cost of care. Naturally, that is a tremendous disadvantage to lifetime saving and the taking of individual financial responsibility. By the same token, it is rather perverse to spend public money to enable the beneficiaries—generally a younger generation—to inherit an estate intact, while being unwilling to take on some of the responsibility for elderly relatives during their later years. I fear that equity release schemes alone will not be enough to solve that long-standing conundrum, but I hope that they will go some way towards reflecting the reality of modern living.

It should be emphasised that such schemes will not only benefit the elderly who wish to live in dignity and independence. They will also be employed by middle-aged parents who have paid off all or most of their mortgages, but now want to help their children to get on to the housing ladder. I think that over the next few years we will hear much more about the difficulties facing those who are currently in their 20s, and other young people who are yet to enter the workplace. What worries me in the current debate about pension provision, for example, is that most current thinking across the political spectrum amounts to little more than a pyramid sales scam against the young.

I am acutely aware that I am at the youngest end of a very fortunate financial generation. I am just old enough to have benefited from university education at a time when getting a full student grant for fees and maintenance was the norm. I entered the workplace in the late 1980s, when tax rates were in a post-war trough and—by current standards, at least—it was relatively inexpensive to get on to the property ladder. When I speak to today's students—as I am sure other Members do—or deal with constituents who are only a few years out of university, I am struck by the fact that many of their generation are almost uniquely likely to be markedly worse off financially than their parents. More often than not, people in their late 20s find themselves with five-figure student loans still to be paid off. In London and the south-east in particular, it is almost impossible for such people to get a foothold on the first rung of the property ladder, even when their salaries are well in excess of the national average.

While today's young work force are funding the current state pension scheme, they know, and I think all of us here know in our heart of hearts, that that will be unsustainable in the long term. In a sense, the financial interests of one generation are being pitted against those of another. I think it inevitable that equity release schemes will increasingly be demanded by a generation of home owners who are keen to provide capital so that their offspring can buy homes of their own during their lifetimes. If that social trend is to be encouraged, as I believe it should be, it is all the more important for there to be general confidence in this rapidly evolving market.

During the Government's open consultation on whether activities relating to home reversion schemes should be regulated by the FSA, some attention was also paid to flexible tenure products. Such schemes allow home owners to increase or decrease equity ownership by transferring interests in a property to and from financial providers such as local authorities or housing associations. There is, I believe, an acceptance that they should be included in the scope of the Bill, although I understand that that is not the intention. The Government's reasoning is that neither local authorities nor registered social landlords should be subject to FSA regulation. I realise that the intention of the draftsmen was to keep an eagle eye on the development of the equity release markets. Nevertheless, I wonder why it was felt that local councils and registered social landlords—often the most important players in the development of the housing market in some of our cities—should be exempt at this stage.

It is essential for any regulatory framework to give the consumer of financial products legitimate protection. That must be the overwhelming objective if there is to be sensible regulation. We were rather disappointed by the Prime Minister's off-the-cuff criticisms of the FSA, which seemed to play to the gallery while missing the serious point. Incidentally, does the Chief Secretary consider the FSA an inhibitor to business, or does he prefer the Chancellor's view that it is a beacon for the rest of the world? Certainly, many financial institutions report feeling increasingly intruded on by the over-burdensome regulation of the FSA, but there seems little cause for complacency such as that expressed so recently by the Chancellor. We need to engage in a more serious debate about the FSA's future in an increasingly innovative competitive and global financial services sector.

We remain determined to protect investors, savers and home owners comprehensively from the mis-selling of financial services and products. In an Adjournment debate on 4 April, however, my hon. Friend the Member for South Norfolk (Mr. Bacon) exposed the FSA's inability to deal rapidly with fraud in the cheque clearing system, even when the institution concerned was one of the UK's largest banks, Abbey National. In the case to which he referred, the FSA clearly failed to monitor the bank's compliance with rules relating to money laundering. Moreover, having lodged a complaint with the FSA, the victims' group has spent more than 12 months waiting in vain for the regulator to begin an investigation. That does not inspire the highest level of consumer confidence. We believe that maintaining growth and competitiveness must be at the heart of the regulator's agenda. There is no reason why that should be at odds with concern about financial stability and consumer protection.

The ability to be flexible is vital to all participants in an open marketplace. We can be assured that some of the providers creating new products under the Bill will be innovative and fast-moving, and that consumers will acquire—and require—a commensurate level of protection. However, if the regulatory regime is too onerous we will risk losing such financial services-related business to beyond these shores, to the detriment of the creation of UK jobs and tax revenues. The consumer stands to suffer too, as the costs of regulation will run up the costs of the new products, and will limit not just the number of new entrants, but the range of equity release schemes.

As we made clear before the election and I am keen to reiterate today, any future Conservative Government, while perhaps not going quite as far as my hon. Friend the Member for Sevenoaks (Mr. Fallon) might wish, would want to give the FSA an additional remit by placing competition and competitiveness at its heart. It must be made plain that institutional business—professional to professional—needs only prudential oversight. Similarly, private client businesses with a high net worth which do not deal with the general public should be regulated with a lighter touch. Even some equity release schemes might come into the latter category. However, I fully appreciate that in the main, although not exclusively, products being sold under the Bill will require more substantial regulatory protection.

I hope that the Minister will be able to confirm that he will authorise a review on the anniversary of mortgage activities coming under the auspices of the FSA this October. We would want it to include a detailed investigation of the workings of mortgage regulation to ensure that it has not been unduly burdensome, while maintaining essential protection for the consumer. Assuming that the Bill completes its passage successfully, I also think that it would be helpful to have a commitment to an early review of its operation. Above all, it should be borne in mind that in expanding the power of a regulator such as the FSA, we must always investigate any unintended consequences of the legislation, not only for consumer protection, but for product innovation and market profitability.

With those reservations, we are happy for the debate to continue. I hope that we shall hear from a number of Members, new and old. This is an important Bill that will affect countless numbers of our constituents. I trust that by the time its passage is completed we shall have ensured that the necessary protections are in place.

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

Thank you, Mr. Deputy Speaker, for giving me the opportunity to make my maiden speech in the House of Commons today. I have listened with interest to the clear explanation of the Bill given by the Economic Secretary to the Treasury and to the helpful comments of the hon. Member for Cities of London and Westminster (Mr. Field). This is an important Bill that has much to recommend it to my constituents, and I shall say more about it in due course.

I intend first to follow the conventions of the House in addressing the characteristics of the constituency that I have the honour to represent, and of the Members who have served before me in representing it here. D. N. Pritt, the distinguished King's counsel whose clients included Ho Chi Minh and Jomo Kenyatta, represented the Shepherd's Bush area from 1935 to 1940 as a Labour Member, and from 1940 to 1950 as an Independent, following his expulsion from the Labour party for supporting the Soviet invasion of Finland. I wanted to get the Soviet invasion of Finland into the debate early, before any other Member raised it. Pritt was defeated at the 1950 general election by Frank Tomney, who sat as the Labour Member for Hammersmith, North—as it then was—until 1979. Tomney's only reference to Pritt in his maiden speech was this:

"The Communists and the pro-Communist elements of the last Parliament have been scattered to the four winds and I am happy to say I played no small part in this myself."

The convention that maiden speeches should be complimentary and uncontroversial is clearly of recent origin. It would be difficult to imagine two more different men than Mr. Pritt and Mr. Tomney. Mr. Tomney also told the House:

"I have come directly from the benches of a factory to the benches of the Commons".—[Official Report, 28 March 1950; Vol. 473, c. 296.]

D. N. Pritt was a bencher of the Middle Temple. They were both remarkable men.

My predecessor-but-one on the Ealing, Acton side is of a more recent vintage. Indeed, I am delighted to see him in the Chamber today. I refer to the right hon. Member for North-West Hampshire (Sir George Young), who represented the then seat of Ealing, Acton between 1974 and 1997. He tells me that he continues to hold Ealing and Acton and their residents firmly in his affections. I can tell him that those sentiments are reciprocated. Eight years after his departure, constituents of all political persuasions remember him warmly, as much for his good nature as for his tireless work.

The marriage of Ealing and Acton with Shepherd's Bush in 1997 led to the election of my distinguished predecessor, Clive Soley. Clive was a member of this House for some 26 years as MP for Hammersmith, North—later Hammersmith—and, until his retirement at the recent general election, for Ealing, Acton and Shepherd's Bush. Clive had a distinguished political career in this House and beyond. While suffering 18 years in opposition, he was nevertheless a ground-breaking shadow Minister for housing, home affairs and, most notably, Northern Ireland. He was a popular and respected chairman of the parliamentary Labour party, and he has been a campaigner on some controversial topics, including the proper regulation of the press.

Clive is perhaps best regarded for his work on conflict resolution and on promoting democracy and reconciliation around the world. In addition to his work in Northern Ireland, he has been active as an election monitor and as a founder of the Arab-Jewish Forum. He will shortly take his seat in the other place. I have known Clive for more than 20 years. He has been my MP, a party colleague and an eloquent advocate on behalf of his constituency. He will be greatly missed and I will find it difficult to meet the expectations that he has created.

As its lengthy title implies, Ealing, Acton and Shepherd's Bush covers a number of distinct communities in west London, not only those named in its title, but Hanger Hill, Southfield, College Park and Old Oak, and the White City, South Acton, Wormholt and Edward Woods estates. It is a mixture of Victorian and Edwardian terraces running along the routes of the District, Central and Piccadilly tube lines, of post-first world war homes for heroes, and of post-second world war local authority and housing trust estates. It is comparatively wealthy and leafy in the west, almost village-like in the centre, and assertively inner city in the east. It boasts some iconic institutions, including the BBC, the Shepherd's Bush Empire, Ealing abbey, Hammersmith hospital and Wormwood Scrubs prison. It contains a substantial part of Britain's biggest industrial estate, Park Royal, and is dissected by several of the capital's main arterial roads.

Since the election of Labour Governments after 1997, Ealing, Acton and Shepherd's Bush has seen considerable regeneration. Unemployment has fallen by half—and long-term unemployment by 85 per cent. Crime is down and police numbers are substantially up, in particular through the recruitment of safer neighbourhoods teams. The White City area is one of the largest development sites in any major European city. It promises to bring thousands of jobs, homes, businesses and shops to Shepherd's Bush, along with the transport and environmental improvements to sustain them. With Government assistance, the boroughs of Ealing and of Hammersmith and Fulham are spending hundreds of millions of pounds on the improvement of local authority homes under the decent homes initiative. Almost every primary and secondary school has seen substantial capital investment.

What distinguishes my constituency most—and is, in my opinion, its finest feature—is the sheer diversity of its population. There are 50 major first languages spoken there, and another 75 significant minority communities. It has third or fourth generation Irish and Caribbean residents, Polish and other eastern European communities, Bengali and other Asian groups, and Arab and African nationalities, including a large Somali population. Almost every country and continent is represented. As a model for integrated living, I recommend it.

I am pleased to have played a part in the life of the constituency as a resident, a councillor for almost 20 years, and as leader of the London borough of Hammersmith and Fulham from 1996 until last month. However, as someone rooted in this part of west London, where my family has lived for four generations, I also see what still has to be done. The view of London, and west London in particular, as a wealthy region is not an accurate one and it needs to be challenged, particularly in regard to allocating public funds. It is more true to say that this is an area of extremes—of wealth and poverty, and of opportunity and barriers to success. That the cost of living is so high and the stress on services so great is in itself a reason why those who struggle have a lower quality of life than they might do elsewhere. This is an issue that I will, with no apology, return to again in the House.

The Bill that is before the House today is a significant measure for two groups that are well represented in Ealing, Acton and Shepherd's Bush. The first are the elderly residents who are cash poor and wish to release equity tied up in their homes. The second are Muslim homebuyers who need to finance purchase schemes that are compliant with sharia law. There is a large and heterogeneous Muslim population in Ealing, Acton and Shepherd's Bush, and the issue of ijara schemes has been often raised with Clive Soley and me.

Two days ago, the House debated a controversial measure to outlaw incitement to religious hatred. Today's Bill will not receive a fraction of the attention devoted to that one, but to my mind, it is a measure of equal significance. It affirms that all citizens of this country will be treated equally in all aspects of their daily lives. It is a sensible and constructive measure and I commend it to the House.

Vincent Cable (Liberal Democrat, Twickenham)

I want to add my broad support for the Bill but, first, I pay tribute to the maiden speech of the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter), which was elegantly phrased and a good introduction to the House. Perhaps I might add that, if he could do something about the traffic congestion and endless roadworks on the way to the BBC centre at White City, much of the House—not to mention his constituents—would be permanently indebted to him. I was surprised that, as a Labour Back Bencher, he did not mention that his constituency is host to Queen's Park Rangers football club. He will soon learn that, in the Labour party, such interests represent an important route to credibility.

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

I should have mentioned it, even as a Fulham season ticket holder.

Vincent Cable (Liberal Democrat, Twickenham)

Indeed.

There are two main elements to the Bill. As has been said, there is broad consensus among consumer groups such as the National Consumer Council, the Consumers Association, the Consumer Panel of the Financial Services Authority, as well as in the industry, on support for the broad principle of bringing home reversion schemes within FSA regulation. I have some questions, which partly reflect that asked by the hon. Member for Sevenoaks (Mr. Fallon). We all accept the principle of regulation but wonder why it is so costly.

We are considering a small industry, comprising about 50 companies, many of which are small, especially in terms of the providers. An estimate—I believe that it is an NCC estimate—shows that even a small company will bear a cost of approximately £475,000 to implement the regulation. Has the FSA considered how the compliance costs could be reduced to more manageable proportions while achieving the Bill's objectives?

I also want to ask—I shall go into more detail later—why the Bill does not extend to to-let mortgages, which is the other major area in which people are trying to extract value from property appreciation. Much money in the markets is moving in that direction and there is a great deal of potential for mis-selling to consumers. Indeed, many of the same points apply, including the need for a level playing field for different sorts of lending. I should like to know why to-let mortgages were not included—whether through oversight or policy decision, or whether the technical nature of the measure prevents their inclusion.

I also welcome the Bill's second feature, which is the extension of FSA regulation to Islamic financing institutions and the coverage of ijara lending—the part of Islamic finance that the FSA does not regulate. It is a big issue. There are approximately 1.6 million Muslims in this country, of whom 250,000 are home owners. Many are anxious to comply with the requirements of their faith and we have a tradition in the House of trying to accommodate religious faith in financial legislation. In the previous Parliament, we held prolonged discussions with the Christian Brethren about annuities. It was an especially heroic act by the Treasury and hon. Members because the Christian Brethren made it perfectly clear that, whatever we did for them, they would not vote.

The Muslim community is much larger and the problem much bigger. People in the Islamic community with whom I have discussed the matter assure me that they are pleased and grateful for the steps that the Government have taken in the Bill. However, they stress that big obstacles remain to Islamic finance being widely used in the market that we are considering and I shall describe a couple.

The nature of the transaction involves a double switch of ownership—the property has to be transferred to the lender so that a rental stream can be set up and then transferred back. That means that Islamic households pay double stamp duty. Perhaps the Chief Secretary would reflect on whether it is possible to tackle that problem.

Under the capital adequacy ratios, financial institutions are required to set aside 100 per cent. rather than 50 per cent. of the value of the loan in reserving, so a much tougher test of financial prudence is set for institutions that provide Islamic finance. That clearly deters the growth of the market. Those issues are technical. The Chief Secretary knows that there are people in the country who are expert in the matter and perhaps he will briefly say whether the Treasury is considering how it can expand its current initiative.

It is right that we should do what we can to encourage the principle of equity release. Enormous numbers of people are asset-rich and income-poor. Anything that can be done to help them release an income from their assets should be welcomed, subject to regulation and prevention of mis-selling. British household wealth is approximately £3 trillion and household debt about £1 trillion. Much of the net £2 trillion is locked in property values. A rough estimate of the total asset valuation of an average household is £50,000. That could convert into a substantial stream of income if it was released.

The problem is that, despite the discussions that we have held on equity release and the Bill, it is an underdeveloped market. There are different estimates of the equity release market but Safe Home Income Plans—SHIP—the private regulatory body, estimates that it grew from £228 million in 1998 to £1.2 billion in 2003. There are other estimates but, given the scale of the equity involved, that is small. None the less, there is considerable potential and one study by a consumer group estimated that equity release could realistically expand from six households in 100 to 40 households in 100 in 20 years. There is therefore much scope for expansion. That would take the market from around £1 billion to £4 billion.

When trying to understand why the market is small and underdeveloped, one has to consider the history of regulation or its failure in the sector. I participated in a debate in January 2003, which the hon. Member for Tiverton and Honiton (Angela Browning) introduced. It covered some of the problems of equity release. The key point that emerged was that the sector was especially prone to serious mis-selling and abuse for several reasons.

First, many customers are vulnerable because they are elderly. Of course, not all elderly people are vulnerable—many of them are extremely sharp and switched on. However, as people get older, their capacity for making complex financial calculations diminishes and the scope for mis-selling is great.

Secondly, some tricky issues surround the valuation of property and that of the discount that applies in the course of a home reversion scheme. The discount is normally 40 per cent. to 60 per cent. and it depends on a complex calculation, which involves age and life expectancy. There is much scope for fixing a number that is disadvantageous to the borrower.

Thirdly, there is scope for large fees, because carrying out a home reversion scheme properly requires independent valuation advice and independent legal advice as well as advice on the products. In many cases, those fees can be considerable. The scope for abuse is great. When we held the debate two years ago, hon. Members of all parties gave moving accounts about the difficulties that the previous boom in home reversion lending in the 1980s caused.

A group of building societies, led by the Chelsea, West Bromwich and Staffordshire building societies, was undoubtedly guilty of perpetrating serious mis-selling of lending, leading to a great deal of hardship that continues to this day for about 10,000 families. Households were encouraged to take on variable loan mortgages and, in return, received bonds. The mortgage interest rates shot up in the financial crisis of the early 1990s, bond yields fell and many people were greatly impoverished.

As the Chief Secretary said in his opening speech, since then the industry has produced a form of voluntary regulation in the SHIP scheme, which has some undoubted advantages. It not only prevents negative equity, as the Chief Secretary suggested, but undertakes that participants continue to live in their home and provides for independent legal advice. There are considerable regulatory gains for the people who participate in it. However, the scheme is fundamentally weak in many ways.

As I understand it, the scheme applies to only 18 of the 50 companies that operate in the industry. It does not involve any form of compliance. The amount of compensation that can be awarded is £25,000, whereas one can get £100,000 from the financial ombudsman and it does not cover cases where the lender becomes insolvent. The scheme therefore has considerable limitations.

Moreover, the FSA has conducted some mystery shopping that suggests that financial advisers routinely fail to give proper advice—routinely, not only occasionally. In 60 per cent. of cases that were monitored through mystery shopping, no attempt was made to explain the risks to participants.

All those factors make the case for regulation through the FSA of the sort that the Government are introducing. The essential arguments for it are consumer protection, a level playing field between different products and the restoration or creation of confidence in an important market.

I want to conclude by asking some questions. First, when do the Government envisage that this new regulation will come into effect? I participated in all stages of the financial services legislation that was introduced two Parliaments ago, and mortgage regulation was first raised six years ago. However, such regulation is only just coming into effect for mortgage-type products. When will this extension of the legislation come into effect?

My second question relates to a point that I made at the outset. Can the Minister explain why the regulatory costs, which are set out in detail in the regulatory impact assessment, are so high, given the relatively small number of companies involved in the industry? I welcome the detail and openness of the assessment. Has the FSA made a serious attempt to tailor its regulatory processes to make such costs affordable and sensible?

Thirdly, when the FSA rules and the secondary legislation are introduced, is the intention to build into consumer protection the provision of independent legal advice? Doing so is crucial to ensuring that consumers are protected. Will there be an obligation to ensure that such advice be obtained?

My final set of questions relates to an issue that I raised in my introductory remarks: why is the Bill not being extended to the buy-to-let market, which is much bigger than the home reversion market and has many of the same problems? At the moment, many very unsophisticated investors are being lured into a highly sophisticated market. Very complex calculations have to be made in buy-to-let, such as likely occupancy rates and the cost of maintaining let property. Many people entering the market have been told by the promoters of the various schemes that they can become millionaires simply by acquiring property. Simple marketing techniques are being employed disingenuously. The Department of Trade and Industry has already carried out an investigation into rogue syndicates in the buy-to-let market, which suggests that the Government are already aware of the serious potential for abuse. Would it not be appropriate, in view of the information that the Government already have, to bring this market within a regulatory framework at the same time and in the same way?

There is potential for disaster here. A great many people are investing in property on the basis of the simple notion that property markets go up for ever. On lending, the traditional prudent criterion for buy-to-let was that the rental to income ratio should be at least 130 per cent. In some cases, that has been reduced to 100 per cent.—in other words, there is massive downside risk from a deterioration in the property market. For all those reasons, it is important that buy-to-let, like other aspects of the industry, be brought within a regulatory framework.

With those qualifications in mind, I support the legislation. It is largely uncontroversial and welcome and we shall play a constructive role in ensuring that it proceeds through this House as quickly as possible.

Philip Hollobone (Conservative, Kettering)

Today is a very special day for me. Four years ago today, my wife and I were married in the Kettering constituency, and my hon. Friend the Member for Cities of London and Westminster (Mr. Field) was with me on that occasion. Little did we think that, four years on, we would be sitting here on a sun-drenched Thursday afternoon discussing the delights of this Bill. I am hoping that placing Mrs. Hollobone on the parliamentary record might prove some compensation for my not being with her this afternoon.

I am delighted that you have called me, Mr. Deputy Speaker, because this Bill has tremendous relevance to my Kettering constituents. The percentage of home ownership in the constituency is high and rising, the age profile of the local population is high and rising, and life-expectancy—thank goodness—is increasing. House prices have risen a lot, especially in the past decade, and continue to do so. Many local residents want to remain in the homes that they have lived in all their lives. They do not want to sell them and move elsewhere. As has already been said, taking out a mortgage and buying a house is for most people the single biggest investment decision of their lives. I share the view of those Members who have said that the number of equity release schemes is likely to increase in the years ahead, as the British population's age profile rises.

My main theme is that, as a new Member, everything to do with Parliament and its procedures is new to me, including the way in which the Government bring their legislation before this House, but in this regard there is one thing that strikes me as odd. This is a relatively uncontroversial Bill and it is generally agreed that the Government's proposals are broadly right. The Bill consists of only two clauses and enjoys the support of organisations such as the National Consumer Council, the Association of British Insurers and the Council of Mortgage Lenders. It was first proposed in 2002, yet here we are in June 2005, discussing its implementation. In the intervening three years, the equity release market has exploded. While the Government and Parliament have gone through all the necessary procedures, nothing, in effect, has been done in law to protect consumers from the dangers that we all realise are inherent in this marketplace.

I shall cite some revealing figures. By the end of 2003, there was almost £2.9 billion in the lifetime mortgage market, with 69,000 lifetime mortgages having been taken out. That market in itself increased by a staggering 69 per cent. in 2003 alone. In 2004, a further £1.2 billion-worth of equity release schemes were taken out, of which some £45 million-worth were to do with home reversion products. According to the Government's own estimate, the equity release market in 2005 is likely to be worth some £1.5 billion—an even higher figure than that for 2004.

The market has been exploding while we have been waiting for the Government to introduce legislation to address everyone's concerns, and there have indeed been concerns in the marketplace. In 2003, the home reversion market totalled some £129 million, yet because of the lack of regulation and the uncertainty surrounding its introduction, that figure fell to £45 million in 2004.

While the procedures that the Government are going through to get this legislation on to the statute book may be necessary, they have been unnecessarily protracted, given that the Opposition parties support such legislation. As I said, the idea was first floated in 2002. In June 2003, the then Chief Secretary to the Treasury announced that the Government were going to introduce

"legislation to bring mortgages and the selling of general insurance within the scope of Financial Services Authority (FSA) regulation".—[Official Report, 5 June 2003; Vol. 406, c. 33WS.]

We then had to wait until November 2003 for the Government to publish their "Regulating Home Reversion Plans" consultation paper. However, a month later the then Financial Secretary argued that, in fact, home reversion products are

"sale and purchase arrangements rather than financial services products",

and that they therefore

"fall outside the scope of the Financial Services and Markets Act 2000."—[Official Report, Westminster Hall, 17 December 2003; Vol. 415, c. 280WH.]

Then, in July 2004, a further consultation document, "Defining Home Reversions", was published and the consultation was on the content of the definition of these products. We then had to wait until December 2004 for the Treasury to publish its summary of the responses received. In January 2005, a ten-minute Bill was introduced to enable these activities to be regulated. Finally, after the eighth stage in the process, the two-clause Bill was announced in the Queen's Speech this May.

As if that were not enough, as I understand it, there are still four stages to go. This afternoon, we are at the stage in which the Government introduce primary legislation to deal with the issue. We are told that in the next stage the Government will consult and bring forward secondary legislation to amend the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. The FSA will then draw up and consult on rules regarding the sale of home reversion products and, finally, firms will need to apply for the FSA's permission to sell them.

I may be naive, but it is not unreasonable to make the point, on behalf of local residents in the Kettering constituency, that the wheels of government need to be far more responsive to the genuine needs of the people we represent. Taking so long to come up with legislation that enjoys cross-party support and the industry's approval strikes me as disappointing. When the rest of the world is speeding up, it seems that Parliament is in many ways slowing down.

Will the Government provide more clarity on when the legislation is likely to come into force? In the intervening period before the new rules and regulations hit the statute book, will the Government take steps to give consumers extra protection to prevent them from falling victim to people who want to sell more of their products? I recently went on to the world wide web to find out about a variety of equity release products. Some looked very reputable with the SHIP organisation—safe home income plans—doing its best to control the industry. One responsible website said clearly in the small print:

"Reversion schemes are not regulated at the moment, although the Government has agreed that they will be regulated by the FSA in the future".

Fair enough—that is all in black and white. At the end of the product advice, however, it said that XXX equity release company and products were provided through YYY Ltd., which was "organised and regulated" by the FSA. The Minister will know, as we know, that it is the company that is authorised and regulated by the FSA, but to the ordinary man and woman in the street, who may not be familiar with this type of product, that creates the firm impression that the equity release product itself is regulated by the FSA. My worry is that my constituents may fall victim to misunderstanding the small print in some of these publications.

I am delighted to have had the opportunity to speak this afternoon and I am keen to listen to the contributions of other hon. Members. This is an important debate and we will all have constituents who will be affected by the impact of the legislation.

Maria Miller (Conservative, Basingstoke)

First, I congratulate the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter) on his excellent maiden speech. I stood in the same shoes not so long ago and I know how it feels. I have rather fond, if painful, memories of the hon. Gentleman's constituency, as I gave birth to my third child in Queen Charlotte's hospital. Interestingly enough, it is located next to Wormwood Scrubs and affords to women in labour spectacular views of the training area.

More and more older people are seeking to release equity from their homes. As the hon. Member for Twickenham (Dr. Cable) said earlier, the sale of equity release plans is expected to increase from £1 billion to about £4 billion in coming years. Home reversion schemes currently account for about £45 million worth of the market. The sector is likely to grow significantly because of the shortfall in many pensions. The collapse of final salary schemes and the extensive burden of tax on pension schemes means that, all too often, my constituents in Basingstoke are looking for new ways to make ends meet. We should do all that we can to ensure that people can buy the available products with a level of confidence. There is a high level of home ownership in Basingstoke and many older people living in the constituency are worried about their pensions and likely to consider these products to help them meet their financial needs in the future.

Currently, the different equity release schemes are subject to very different types of regulation, which, as my hon. Friend the Member for Kettering (Mr. Hollobone) said a few moments ago, can be somewhat confusing. Home reversion is subject to voluntary regulation, but schemes with similar or lower levels of risk could fall under the Financial Services Authority. This sector deals with elderly people and we should be offering them the same safeguards that are available in other sectors of the financial services market. The products are complicated and the decision to undertake a home reversion equity release scheme should not be taken lightly. There are complicated implications for those who may be considering taking them up as an option to boost their pension incomes. Some of the people concerned may have had limited experience of financial services and products in the past.

We are fortunate that many charities have taken up this problem. Age Concern has issued a number of fact sheets and has an excellent website that sets out the problems in detail, and Help the Aged has set up an equity release service in order to support those who feel that they need more advice on the subject. All too often, however, the charities are asked questions that are difficult to deal with and they are often asked to give advice that is perhaps inappropriate for voluntary organisations. Even if those who contact the charities seek professional advice, they will not have the same level of protection against mis-selling that they would for a regulated product. Evidence suggests that change is needed, so let me use an example to highlight it.

Age Concern was contacted by a woman who reported that her neighbours had taken out a reversion scheme five years ago, which involved selling 90 per cent. of their property. They were receiving a modest monthly income from it, but had lost nearly as much in benefits. The husband could not read or write and at the time the decision was made to take up the plan, the wife was in the early stages of dementia. The neighbour felt that those people should not have taken out the scheme and had not fully understood the implications of what they were doing. They were having considerable difficulties trying complain about the advice that they had been given.

It is difficult to quantify the number of people who may now regret taking out reversion products and it is not possible to judge whether they were mis-sold, but it is certain that the complexity of these products leads many organisations, including Help the Aged and Age Concern, to believe that regulation should apply to home reversion schemes. Regulation should be able to provide a more level playing field, which could be useful both for the providers and the purchasers. It would ensure that the same cost of entry to the market applied to all providers. It would also give purchasers the same level of confidence and protection afforded by other equity-release products.

Good advice is vital. People must understand the risks involved in changes in interest rates and house prices when they undertake these plans, and that the schemes are often not portable. People who want to downsize could therefore find themselves trapped in inappropriate accommodation. As I said before, the means testing of benefits must be taken into consideration when home equity release schemes are considered. Once made, such decisions are difficult to change and so they must not be regretted.

In the past, this sector of the market has not enjoyed a great reputation, which has meant that the larger lenders have not entered the home reversions market—possibly for fear of the risk to their reputations. That may be another reason why it is time to put more formal regulation in place, but I want to draw the Minister's attention to various difficulties that he should consider as we move forward.

As my hon. Friend the Member for Cities of London and Westminster (Mr. Field) said, regulation can place a heavy barrier against market entry, especially for smaller providers. It will cost about £11 million to put the regulation in place, and ongoing costs will amount to about £5.4 million. I fully understand the merits of the FSA, but it has not always been the panacea for all ills. Some people say that it is more about ticking boxes than protecting customers, so we must ensure that everything possible is done to encourage a competitive environment in the financial services sector.

The FSA must draw up its own rules on the sale of home reversions and put those rules out to consultation. I hope that that can be done in a way that protects consumers and promotes and supports innovation in the market. As has been said already this afternoon, this could become a very important sector of the financial services market in future.

Equity release is a growing market, as we have heard, and we must take into account the fact that its growth is often due to the inadequacy of people's pension provision. Without good advice and protection against mis-selling, another financial scandal could happen in the future. It is far better to introduce regulation before another major mis-selling problem arises than to allow a problem to occur in the first place.

Mark Harper (Conservative, Forest of Dean)

I begin by echoing the comments made by my hon. Friend the Member for Kettering (Mr. Hollobone) about how long it has taken to get this Bill before the House. The Opposition, in the person of my hon. Friend the Member for Eddisbury (Mr. O'Brien), have been calling for the measure since January 2003.

I also echo what my hon. Friend the Member for Basingstoke (Mrs. Miller) said. A number of my constituents are thinking about taking out home reversion plans and lifetime mortgages because they are having difficulty making ends meet. In part, that is due to the difficulties that they are encountering with pension schemes and the closure of final-salary pension schemes resulting from the tax of £5 billion a year placed on them by the Chancellor. In fact, the annual burden on pension schemes is larger than the entire equity release market.

The equity release market does more than supplement pensions, as has been noted. In the future, it will be used to pass wealth down the generations and enable the younger members of families to get a foot on a housing ladder that is becoming increasingly expensive and out of reach, especially in London, the south-east and the south-west.

I turn now to the Bill. I support moves to increase confidence, especially in the home reversion equity market. Many of the consumers who find such products attractive are elderly, and they deserve the protection of sensible and robust regulation. They also need access to the financial ombudsman service and the financial services compensation scheme to which the Minister drew attention in his opening remarks. In my Forest of Dean constituency, as is the case in the constituency of my hon. Friend the Member for Kettering, the proportion of elderly people in the population is higher than average. That is likely to increase quickly in the future, so these products will be increasingly relevant to their needs.

In regulation, it is a good principle to ensure a level playing field. Most equity release products are mortgage based. Those products were brought within the ambit of the FSA last autumn, so it seems sensible that the same thing should happen with home reversion plans. That would ensure a level playing field on both sides of the market, but I support the call made by my hon. Friend the Member for Cities of London and Westminster (Mr. Field) for the Government to review the impact of the FSA's regulation of the mortgage market. We need to see how that has worked, and whether the costs incurred are appropriate for the level of protection for consumers. In that way, we can make sure that a proper balance is maintained.

I want to pick up on a point made by the hon. Member for Twickenham (Dr. Cable), who asked about a requirement for independent legal advice. I think that it would be helpful to require those giving financial advice to discuss with clients whether independent legal advice is necessary. However, I am somewhat cautious about making such legal advice compulsory, as some consumers will be well able to understand these matters without it. Insisting on legal advice in all circumstances would add to transaction costs, but it would be helpful if the person giving financial advice were required to discuss the need for legal advice, and to explain some of the pitfalls involved.

What is the cost of regulation, and does it stifle flexibility and innovation? Several hon. Members have drawn attention to the cost of the proposals—a one-off cost of £11 million, and an ongoing cost of £5.4 million. In 2004, the total size of the market for home reversion plans was only £45 million. That represented a fall from the year before, perhaps due to the confusion in the market, but the cost figure that has been quoted still seems rather extreme. The fall may be due to the historically poor reputation of home reversion plans, to which my hon. Friend the Member for Basingstoke referred. However, an increase in regulation may serve to increase confidence and cause the market to grow as more consumers choose to take out such schemes. Average market growth would then rise, and the burden of regulation as a percentage of market size would fall. That is to be hoped for and, if it happens, welcomed.

As my hon. Friend the Member for Basingstoke also noted, we must make sure that regulation does not stifle innovation and flexibility. Several hon. Members have noted that the market is likely to grow. We in this country are lucky to have a flexible and innovative financial services industry, so we must ensure that financial service providers are able to deliver new products for the benefit of customers. I hope that the proposed regulation will aid that.

My final point also highlights the need for flexibility. The House of Commons Library has produced an excellent paper on this subject, and the example given in the appendix illustrates the changes in expectations in the financial services industry that have taken place over the past few years. The example refers to an episode of the comedy "The Good Life", made in 1977. For a person of my age, it seems strange that a pension of £2,000 a year was considered absurdly high, and the fact that a house in Surbiton could be bought for only £25,000 is just a distant memory.

The serious point is that decisions involving financial services can extend 20, 30 or 40 years into the future. The world is uncertain and the products are complicated, and that is why good advice is essential.

David Gauke (Conservative, South West Hertfordshire)

I congratulate the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter) on an excellent maiden speech. He spoke very graciously about his predecessors. I am sure that he too will be popular among supporters of all parties in his constituency. Indeed, I see some of them publicising him in future: come the next general election in Ealing, Acton and Shepherd's Bush, I expect there will be posters almost everywhere saying, "Slaughter the Labour candidate".

I also congratulate my hon. Friend the Member for Kettering (Mr. Hollobone) on his wedding anniversary, and I congratulate my hon. Friend the Member for Cities of London and Westminster (Mr. Field) on managing to avoid the Finance Bill Committee this afternoon. I note that the House is rather thinly attended and that there may still be time for him to return to the Committee later. I am afraid my remarks will be brief and will not prevent that.

I believe that equity release schemes will be an increasingly important part of our system in the United Kingdom. The hon. Member for Twickenham (Dr. Cable) rightly said that although it is an immature market, it is maturing rapidly and gaining in importance. The reason is that, as we all recognise, an increasing number of people are property rich and cash poor; to confirm that I need only look to my own constituency, which is largely very property rich, as illustrated by the fact that a recent report detailing average house prices in towns showed that three of the top 10 were in my constituency of South-West Hertfordshire: Tring, Berkhamsted and Rickmansworth.

This situation has come about largely as a result of recent movements in house prices and the fact that many of the people living in quite valuable properties do not have, and have never had, a particularly high income. They have benefited from the price increases but they are faced with financial difficulties now because, although property rich, they can be cash poor for a number of reasons. We all know the number of elderly people who struggle to pay their council tax. They are on a fixed income, and council tax has more or less doubled since 1997; that is an enormous drawback for a number of people.

There are also problems within our pension schemes. A number of my constituents who were previously employed, were previously within the Dexion pension scheme. Dexion is now insolvent. Many hon. Members will know of constituents who thought they had a secure pension but have found that that is no longer available to them. We are also witnessing the movement away from final salary pension schemes, which is causing great difficulty.

In those circumstances, it is most unfortunate that people who are sitting on a highly valued property are not able to make better use of it, for any of several possible reasons. There is perhaps a generational attitude—a reluctance to borrow any more than necessary, and a tendency, having paid off the mortgage, to regard equity release as a backward step. There is also an entirely natural desire to leave as much value as possible to the children. But there may also be a lack of confidence in pursuing an equity release scheme, and that is to some extent what the Bill seeks to address.

I think it is a legitimate desire for all parties to seek to ensure that equity release schemes that are to people's advantage are available, and to encourage people to enter into them. My hon. Friend the Member for Cities of London and Westminster made a good point when he said that we need to move away from the idea that long-term care must be funded either from the public purse or from individuals' immediate cash savings, and said that if people can allocate resources more efficiently, and equity release enables them to do so, that should be encouraged.

Having said that equity release should be encouraged, I turn my attention to the two types of scheme. Mortgage-based schemes already fall within the scope of the FSA. Pure home reversion plans do not, and clearly one purpose of the Bill is to encourage greater consumer confidence in this area. I think I welcome that, although I speak as someone who, by instinct, is against further regulation wherever possible.

It should also be noted that there will clearly be concerns about the drafting of the statutory instrument and the reform of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, because that is where the detail exists and that is where, effectively, the law changes. As an aside, I speak as someone who used to advise on the Financial Services and Markets Act 2000 fairly regularly. Schedule 2 was always a mystery to those of us advising on the Act because it had little practical purpose. I now appreciate why schedule 2 is there: it ensures that the Act must be amended whenever there is an extension in this area and it gives the House an opportunity to debate it. At a practical level, however, the detail will be in the regulated activities order.

Having mentioned my background of dealing with FSA matters, I should say that there are a number of concerns about the operation of the FSA, some of which have been mentioned by my hon. Friends. There is a feeling that it is too prescriptive, and my hon. Friend the Member for Basingstoke (Mrs. Miller) was absolutely right to say that complying with its requirements is often seen as a box-ticking exercise. I know that the senior management of the FSA increasingly want to look at the broad principles and try to make things less prescriptive. However, it is very difficult to work that through the FSA so that the people dealing with regulated firms appreciate the broad principles, and there is a degree of defensiveness from the FSA, partly because of political pressures. It is easy for hon. Members always to blame the FSA when things go wrong and when our constituents lose money, and sometimes the FSA will be to blame, but the FSA has, I think, become rather risk averse and defensive, and that can stifle innovation, as the Prime Minister rightly said a few days ago.

Another criticism that one could make of the FSA is that there should be a greater distinction between wholesale and retail. Clearly, what we are discussing today is largely a retail matter, and we heard from the Minister of the areas where a fair degree of regulation will be required in respect of the advice to be provided, key features documents, and so on. None the less there are financial arrangements within this home reversion where detailed regulation can be relatively light. For example, I assume that the capital adequacy regime applying to firms in this area will be somewhat light; I see no reason why it needs to be heavy.

A number of hon. Members voiced unease as to the cost of FSA regulation in this area. One criticism that I have read repeatedly in respect of home reversion plans is that firms involved appear to be making a disproportionate profit. Part of that is no doubt due to the extent to which property prices have risen. Another factor is the lack of competition. Anything that increases competition within this area is clearly to be welcomed, but as we heard from my hon. Friend the Member for Basingstoke, there is concern that FSA regulation can prove too much of a barrier to entry. I would urge the FSA and the Treasury not to do anything that increases that. An easy application process would be welcomed and I know that the FSA has moved in that direction in other areas.

I welcome the Bill and I welcome the extension of regulation into this area, but I urge the Treasury and the FSA to remember that it is through greater competition that better services will be provided to those taking out home reversion plans.

Des Browne (Labour, Kilmarnock and Loudoun)

With the leave of the House, I shall reply to this excellent debate. I wish to say at the outset that it is my intention to make my reply directly proportionate to the length of the debate and inversely proportionate to the desire of the hon. Member for Kettering (Mr. Hollobone)—and his friend the hon. Member for Cities of London and Westminster (Mr. Field)—to be free to celebrate his wedding anniversary, on which I heartily congratulate him. I should also take the time to congratulate the hon. Gentleman's wife on the occasion of their anniversary.

It has been a privilege to be present for the maiden speech of my hon. Friend the Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter), and I am delighted to welcome another lawyer to the House—although I am not sure whether he will get a welcome from any other profession. His speech was described as elegant—and, indeed, it was—and he delivered it with some confidence and humour, which is always very welcome in the House of Commons.

I am grateful to my hon. Friend for reminding me of the contribution that his predecessor Clive Soley made to the House. He was a well-regarded parliamentarian, who among other things made a significant contribution to the Northern Ireland peace process and was well-regarded internationally for his work on conflict resolution. He will be missed. I am sure my hon. Friend will be a more than adequate replacement for him. If his opening remarks and his maiden speech are anything to go by, he will be an adornment to the House, and we look forward to his further contributions.

While we are in the mood for expressing congratulations and good wishes, perhaps you thought that you had slipped under our radar, Mr. Deputy Speaker. I hope that you will forgive me if I wish you a happy birthday today.

Mark Field (Conservative, Cities of London and Westminster)

There must have been a misprint in the age.

Des Browne (Labour, Kilmarnock and Loudoun)

Of course there was a misprint in the age, but not in the date.

I shall now turn to some of the specific issues that have been raised. A number of hon. Members—including the hon. Member for Cities of London and Westminster although this strand of the debate was started by the hon. Member for Sevenoaks (Mr. Fallon), who was a distinguished member of the Treasury Committee—raised an issue that is, of course, dear to all our hearts: the requirement to ensure that we examine the proposals in a way that minimises the regulatory burden and expense. We are well advised to be continually vigilant against unnecessary regulation, and we were reminded of that necessity by the hon. Member for Twickenham (Dr. Cable) and by other contributors to the debate, most recently the hon. Member for South-West Hertfordshire (Mr. Gauke).

I am invited to express my view of the Financial Services Authority, and will do so. The FSA is internationally regarded and respected for its approach to regulation. As with every other regulator, the Government will work with the FSA to ensure that our better regulation agenda continues to underpin its approach, and it is not an error for us at any stage to remind it of those principles. However, irrespective of whatever criticisms we may have about the day-to-day application of regulation or, indeed, about any individual case, we should also remember that London's regulatory environment is regarded as the best among those of the international financial centres. It is ahead of New York and well ahead of Frankfurt and Paris, and it is described as having the potential to remain so until 2008. That assessment comes from a survey by the Centre for the Study of Financial Innovation, published in July 2003.

On 24 May, my right hon. Friend the Chancellor launched a better regulation action plan designed to boost flexibility and enterprise with the introduction of a risk-based approach to regulation. I have heard nothing in the debate that jars in any way with that approach to regulation. Indeed, such an approach to regulation would gain support from all those hon. Members who have spoken.

Again, irrespective of any criticisms people may have about their experience of the FSA or about individual cases, the FSA is a pioneer of the risk-based approach to regulation and is considered a world leader in this field. But we should not of course forget that we require the FSA by law to meet certain standards. I understand from the contributions made by hon. Members—particularly by Opposition Members, who clearly speak with some experience of financial regulation—that we must share responsibility for the questions that we ask of that regulatory authority.

We require the FSA by law to demonstrate, among other things, that the regulatory burdens are proportionate to the benefits that they provide; to operate economically and efficiently; and to take account of the effects of regulation on international competitiveness, innovation and competition. I am grateful to hon. Members for their reminders of those principles.

John McFall (Labour, West Dunbartonshire)

My right hon. Friend mentions better regulation, and a number of business people have contacted me in the past couple of weeks to remark on how seriously the Government have taken that issue.

On the FSA, we previously had 10 separate bodies; we now have one regulatory body. The FSA has done good work in the past few years, but this is a fast-moving market, as my right hon. Friend knows. With equity release schemes and others, new problems arise and we need a flexible response from the FSA and the Government. Will my right hon. Friend keep that in mind as he frames this legislation?

Des Browne (Labour, Kilmarnock and Loudoun)

I am grateful to my right hon. Friend, who has developed expertise in such issues, is respected for his comments on these matters and chaired with distinction the Treasury Committee during the last Parliament. We will, of course, take seriously anything that he says on such issues, on the basis of his knowledge and experience and of the regard in which he is held.

The very structure of the legislation enables us to do just what my right hon. Friend suggests, and as I shall say later in concluding, there will be opportunities for consultation to ensure that the regulations that emerge meet those standards. As he and other hon. Members know, the Government want to encourage the development of risk-based regulation, and I remind the House that the FSA is considered a leading example of that approach to regulation. We intend to build on that, not to destroy it.

I turn now to the specifics of the regulatory impact assessment, which has exercised a number of hon. Members. The hon. Member for Sevenoaks referred to it in an intervention, and it has been mentioned in more detail by other hon. Members, including the hon. Member for Twickenham. That assessment has arrived at estimates of £11 million for the start-up costs and £5 million annually, and I stand by them. I remind the House that, as we have been constantly told, such regulation has been requested and supported, not only by hon. Members on both sides of the House, but by consumers and, indeed, the industry itself—something that is very important. One of the principal reasons for those requests is that the development of this market, which we all wish to see, depends on confidence and security in the market, and its proper, appropriate and proportionate regulation is necessary to underpin the development of the market itself.

The Government's approach to such regulation follows the better regulation process. We have consulted twice already, as we have been reminded, and we have received an overwhelmingly positive response from the industry. The FSA will consult again on its detailed rules for such products, and I am happy to deal with the inevitable consequences, such as further delay, later in my remarks. The FSA will carry out a further cost-benefit analysis, refining the existing figures further—and, of course, in doing so, it is obliged to ensure that the burden of regulation is proportionate.

I have in my papers a number of quotations from various sources that welcome the Bill, but since there is no dissent in the House, I do not need to persuade anyone that those outside the House want us to proceed with this legislation, so I will not deploy them.

It is the Government's view that, overall, the Bill is likely to lead to a comparatively small increase in FSA expenditure and I shall give figures in a moment so that hon. Members can share my view of proportionality. The additional expenditure will be met by an increase in the fees levied by the FSA under the Financial Services and Markets Act 2000. On the basis of FSA figures on the current cost of mortgage regulation, it is estimated that the one-off cost to firms that sell lifetime mortgages will be between £6,000 and £11,000. That cost would of course be less for firms that were already authorised by the FSA for other businesses. The hon. Member for Twickenham referred to his experiences of trawling the world wide web and indicated how that can be misleading of itself, but I shall return to that matter in a moment or two.

The total one-off compliance cost to the industry for home reversions is estimated to be about £11 million, but it is extremely difficult to gauge ongoing costs in a market that is clearly developing and could expand considerably. However, in the absence of further refinement, which we will ask the FSA to make, the best estimate of the ongoing cost for an expanded provider base is £5.4 million a year. Of course, the market for the Islamic or ijara products is developing, but the immediate cost of regulating that market would be small.

I shall share some figures with the House so that hon. Members can reach a view about the question of proportionality. There are currently about nine providers of home reversions and about 17 members of safe home income plans, or SHIP. The total value of reversionary lending by members of SHIP in 2004 was only £40 million. The number of active home reversion plans on the market at the end of 2004—this again refers to SHIP—was 2,524.

The equity release market is a much more substantial market with 32 providers of lifetime mortgages and 57 other firms specialising in equity release. The value of new lending in the equity release market, which is currently a restricted market for the reasons that we have discussed, was more than £1.2 billion in 2004. The total value of lifetime mortgages outstanding in 2004 was just over £4 billion, and the future capacity for equity release sales annually, which is based on an actuarial calculation of 15 per cent. of the eligible population purchasing such a scheme, is £4 billion by 2031. I have given hon. Members those figures so that they can estimate the cost of the regulation, but they should bear in mind that the cost is proportionate, given that the regulation will instil significant security and confidence in the market.

Vincent Cable (Liberal Democrat, Twickenham)

I have just dug some figures out of the Treasury's consultation document. Simply to clarify the point about cost, will the Chief Secretary confirm that the cost of between £6,000 and £11,000 was for the intermediaries, or the advisers? The Treasury's estimate of the cost to reversion providers is something of the order of £500,000.

Des Browne (Labour, Kilmarnock and Loudoun)

I will of course confirm the figure that the hon. Gentleman has shared with the House, given that its source is a Treasury document. He also cited it during his speech as evidence of a significant cost when he urged the Government to require the FSA to consider the possibility of reducing compliance costs. I remind him that the figures are estimates that are based on the best information available and that the FSA will undertake further work, including a full cost-benefit analysis, when it draws up detailed rules. The authorisation costs will be approved only after a proportionate regime has been set up. In turn, the fees will be tailored to the turnover of the regulated firm, so small firms will clearly pay less. The figure that he cited was based on a firm with a turnover of between £10 million and £100 million and it includes £235,000 of information technology costs. I am not sure whether the IT costs will be a one-off cost, but when I have clarified the position I shall ensure that hon. Members are made aware of it.

The hon. Member for New Forest, East (Dr. Lewis) reminded us during an intervention about the harm that was done by shared appreciation mortgages. I shall try to respond to the question that he asked my hon. Friend the Economic Secretary, although I see that the hon. Member for New Forest, East is no longer in the Chamber. About 15,000 shared appreciation mortgages were sold by Barclays and the Royal Bank of Scotland before they were discontinued in 1998. Few people in 1997 could have foreseen the extent to which house prices have risen. If house prices had risen more slowly, or even fallen, such borrowers would have been receiving loans at an extremely low interest. However, several complaints arose because people—they could properly be described as victims—were caused significant distress by the plans. Interestingly, not one of the allegations of mis-selling that was raised with the financial ombudsman service was upheld. Shared appreciation mortgages are no longer sold. If they are marketed in the future, they will of course be subject to the new FSA regime for lifetime mortgages. The Government have had some success in persuading the industry to help some of the victims of the plans and will be prepared to continue to pursue that.

The hon. Member for Twickenham also dealt with past mistakes because he described how the Government were responding to people's problems with home income plans. Those plans were a form of equity release scheme that provided a regular income to purchasers. There were specific problems in the late 1980s with the version of home income plans called investment bond based schemes. Those schemes used the proceeds of a loan raised on a property to invest in a bond that was designed to provide sufficient returns both to repay the interest on the loan and to provide an income. Unfortunately, the investments failed to provide the returns required and investors found themselves with rising debts to their lenders. The problem has been well recognised and a range of measures has been put in place to help people.

The sale of investment bonds was regulated under the Financial Services Act 1986 and regulators effectively banned home income plan schemes involving such bonds in the early 1990s. Investors were able to claim against their advisers, who were required to return the capital invested. That led to several independent financial advisers being declared in default by the investors compensation scheme—the forerunner of the financial services compensation scheme—which then paid any necessary compensation.

About £70 million has been paid to some 4,500 HIP investors either directly by advisers or, if they have gone out business, by the investors compensation scheme. Of course I recognise that under the 1986 Act compensation was able to address only funds put into an investment bond and that unfortunately a number of people used some of the sums raised for other purposes. As a result, many were left with a residual debt to their lenders after the payment of compensation allowed under the 1986 Act. The Government believe that residual debt is a matter for the lenders, but fortunately most lenders have offered a package of measures to HIP investors to address the problem. The Government hope that all lenders will continue to take as generous and sympathetic an approach to residual debt as possible. As the hon. Member for Twickenham will be aware, there is no leverage for the Government to ensure that that should be done, but the industry has an obligation to respond appropriately in those circumstances.

The hon. Gentleman asked about buy-to-let regulations and the activities of property investment clubs. The Government are aware of concerns about the activities of such clubs operating in the buy-to-let market. Concerns focus on the fact that schemes may be operating as collective investment schemes, which are of course FSA-regulated. It is my understanding that the FSA is looking carefully at the activity of those schemes and no doubt its advice to Ministers will be forthcoming in due course.

The hon. Gentleman asked about facilitating Islamic home finance, with reference to the effect of stamp duty. The Government's policy is overtly to tax Islamic financial products on a level playing field with conventional equivalents where it is practicable to do so. The hon. Gentleman probably has more experience of Finance Bills than anyone in the House, so he will know that the Finance Act 2003 removed a major barrier to the marketability of Islamic home finance products by introducing reliefs to prevent multiple charges to stamp duty when using the murabaha or ijara products. The Budget of 2005 announced that those reliefs were to be extended to include a newly available Islamic home finance product based on shared equity, and amended to ensure that ijara products—the product of choice in the marketplace—could be used in Scotland, so effective regulation will be of considerable importance. I hope that that responds to the issue raised by the hon. Gentleman.

The hon. Gentleman referred to the FSA review of the sale of equity releases, arguing that it showed that regulation of those products is less effective than it could be. On 24 May, the FSA published the results of a review of its regulation of the sale of equity release schemes, which in fact showed that the regulation of those products was working quite effectively. It showed that targeting regulatory action can significantly improve customer protection and demonstrated the benefit of regulation—by acting promptly in the market, the FSA can help to raise selling standards to ensure that consumers do not buy unsuitable products.

The FSA carried out the mystery shopper exercise, to which the hon. Gentleman referred, to ascertain the standard of advice being provided to consumers purchasing regulated equity release products. Four visits were made and three desk-based reviews were carried out between January and early May 2005, looking mainly at advice given during June 2004. As a result of what was revealed by that exercise and through its other experience, the FSA is committed to ensuring that firms improve their standards in that field. It may reassure the hon. Gentleman to know that the FSA will revisit the firms it reviewed to ensure that they have acted on the issues identified during that exercise. The FSA will also review standards in other firms active in that market.

The hon. Member for Cities of London and Westminster recognised yet another birthday for the House, in that we are coming up to the first anniversary of FSA mortgage regulation. The FSA assumed responsibility for the regulation of first charge residential mortgages on 31 October 2004, and regulation has undoubtedly benefited millions of consumers by providing safeguards and minimum standards of mortgage advice. Indeed, Anne Gunther, the chair of the Council of Mortgage Lenders, recently stated, in the CML annual report 2004, that statutory regulation was implemented remarkably smoothly, and that it was a credit to all concerned.

A review of that activity is appropriate and timely, and the FSA is committed to commence a review of the existing mortgage regime by the end of 2005. Before conducting a review, it is important to allow the regime to bed down so that it is the experience of the process that is reviewed rather than its introduction. I trust that that will reassure the hon. Gentleman that the FSA has that issue in mind.

The hon. Member for Twickenham asked me to ensure that a requirement for independent legal advice was built into the regulation and that request received some support—albeit not overwhelming—from the official Opposition. The Government's view is that determination of the detail of the rules is a matter for the FSA. There will be rules about the advice to be given, but at this stage I can give the hon. Gentleman no comfort that the FSA will require all persons who are considering taking out such products to be given independent legal advice.

I shall explain why the whole process has taken so long. I point out to the hon. Member for Kettering that although I am not a long-standing Member of the House it is clear to me after only eight years that the greater the all-party support for anything, the greater the scrutiny it deserves and the greater should be our care in introducing it. If we all think that we are doing the right thing, we have to be careful not to end up inadvertently collectively doing the wrong thing.

Why has this matter taken so long? I have some sympathy with the hon. Gentleman's apparent frustration at the pace of change in our legislative process. Many Members will more than welcome him as a new member of the modernising tendency that is emerging in this place. He will find many allies and I am sure that as they read the Official Report of our debates they will single him out for attention and recruit him to their ranks. However, the tenor of the debate—the weight of the contributions from Members who reminded us how burdensome regulation can be—answers his question. The Government's view is that we are prepared to regulate only where there is a clear need. We have to establish the costs and benefits of regulation before proceeding. The hon. Gentleman was entirely correct in his history of the process and of how we reached this position.

Two consultations were carried out before the Bill was introduced. Why? Because the products are complex and it is important to get the regulations right. Equally, it is imperative that people with a direct interest in the regulation of the products—be they providers, consumers or other interested parties—support the direction of travel of the regulations.

That is what the Government have achieved. It may have taken time, but the regulatory regime will be in existence for a considerable period. People who discover that they have contracted before the regulatory regime comes into force are at a disadvantage. As the hon. Gentleman and other hon. Members have observed, the imminence of the regulatory regime may have a depressive effect on the market. That is not necessarily a bad thing, as people who contract in future, in what we all hope will be an expanding market, will have the benefit of the protection afforded by regulation.

The hon. Gentleman asked when will regulation come into force. The best answer that I can give him from the Dispatch Box is that we will introduce it with appropriate haste. We will move to make regulation effective as quickly as we possibly can, subject to the timetable for secondary legislation and further consultation. As secondary legislation is required, we cannot assume that the House will agree to regulation—the matter lies in the hands of the hon. Gentleman and other hon. Members.

I was asked what protection is available for consumers before regulation comes into force. The FSA already publishes advice for consumers who are interested in buying home reversions. The "FSA Factsheet: Raising money from your home" was published in May 2005, and hon. Members and their constituents can access it through the FSA website. If they cannot do so but would like a copy, they can contact the Treasury. If hon. Members, including the hon. Member for Basingstoke (Mrs. Miller) and the hon. Member for Forest of Dean (Mr. Harper), whose contribution and support I welcome, have examples of misleading advertising they should tell me, and I will endeavour to indict or prevent advertising that may mislead their constituents and others. The majority of equity release schemes, namely lifetime mortgages, are already regulated. After the Bill has been examined in detail in Committee—and I welcome the willingness of the hon. Member for Cities of London and Westminster to undertake such examination—we will be able to regulate the rest of those schemes.

In conclusion, the Bill will extend the boundaries of FSA regulation to include home reversion plans and ijara home finance arrangements, thus helping people to make informed choices. It will offer valuable consumer protection and it will ensure that there is a level playing field in the equity release market, most of which, I remind the House, falls within the scope of mortgage regulation. It will introduce detailed provisions to extend valuable protection to elderly and vulnerable consumers when making one of the most important decisions that they are likely to make. It will ensure that Muslim consumers can access all parts of the growing market in sharia-compliant home finance products while benefiting from the protection afforded by FSA regulation. It will help people to make informed choices about home finances products that they purchase. It will create a level regulatory playing field within the equity release market, and it will help to improve consumer confidence in those products, thus facilitating the significant market growth that we all want.

For all those reasons, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.