***CHECK AGAINST DELIVERY*** Baroness Dianne Hayter Speech in Financial Services Bill Committee to amendments on responsibility to consumers My Lords,

I rise to support the amendments in this Group, with predictably a particular interest in ensuring Wales is well represented on the Panels. Too often these westerly peoples are forgotten, especially as they have less of a financial sector. But the needs of their citizens are perhaps greater, given how poorly served are rural areas, and the financially excluded both of which are found in Wales. So I thank my Scottish Friend, the Nobel Lord McFall, for his concern with my country (and with Northern Ireland). Turning to amendment 128A, that the Panel should represent households using products. This is key if only to emphasise the importance of the financial services sector to the whole community. It is, in effect, a public utility, with some of the same obligations on the industry to provide a universal service even in non-profitable areas. It is equally important to ensure that users of the less profitable services are part of the system of regulation or its scrutiny. These individuals and families often rely heavily on financial services even if they dont feature on a CEOs radar. My Lords, I should fez up first that I was Vice Chair of the Financial Services Consumer Panel, so I am acutely aware of the absolute necessity of a broad range of experience, views, and backgrounds on the Panel. The new Panel will deal with a range of issues, which impact on a wide variety of consumers. It is part of the reason that we so need a Panel: consumers are not a homogenous group. Their needs, capabilities, life experience and expectation, as well as their and interaction with the sector, cannot be slotted neatly into a consumers box, to be easily ticked off. So the Panel will want to draw on the policy, research, intelligence and expertise of people long embedded in the consumer world, who bring with them in-depth knowledge and understanding of consumer behaviour, consumer detriment and equally important, of consumer law, debt management, credit, insolvency, complaint handing, redress, retail sales, the financial world and possibly Europe. But the Panel will also need some street-wise input, perhaps less exposed to the intricacies of regulatory regimes, Europe, consumer law and research. But who, themselves, know what the real world feels like from less exalted heights than from the portals of Canary Wharf. May I turn finally to a major issue, amendment 136A, standing in the name of my Noble friend, Lord Eatwell and myself: the need to balance the caveat emptor principle (buyer beware) with an equal responsibility of those advising, or providing services to, consumers to act in the best interests of clients. We have heard of the challenge facing consumers in judging whether a company is prudentially secure, whether the product they are buying is fit for purpose, value for money or even covers the

risks they assume it will. Added to which, the very pricing of products, their complexity and peoples lack of understanding of their own risks, let alone of the risk inherent in products, makes it extremely hard for buyers to have the knowledge to take responsibility for the choices they make. The level of risk left with the consumer is often unclear. The meaning guaranteed or tracker may differ from their common use meaning. Consumers often bear a level of risk unknown to them and seldom explained. They are effectively making choices blind-fold. In an ideal world, of course, we support the responsibility principle. Its what makes markets work, by consumers shopping around and driving up standards and hopefully driving down excess charges. But in this market, with those long term credence goods, opaque structures, and the asymmetry of information, we need to reintroduce some trust and transparency by balancing consumer duties with provider duties. In an industry beset with low levels of compliance and high levels of complaints, and no agreed standards for complex and long term products, it is hard to expect consumers to adopt a higher degree of responsibility than is already legally acknowledged. So by the Bill writing consumer responsibility into 3B(1)(c), I have concerns that it appears to up the existing situation. In law there are no obligations placed on consumers other than to act honestly. So it is not clear what a greater emphasis on consumer responsibility might achieve. And why impose a possibly new principle of consumer responsibility without any countervailing responsibility on the service provider? Amendment 136ZA is to express the need for that balance at the point where, otherwise, the industry might grab hold of this wording to say: see; it was their choice and their responsibility. Lord Turner (whose chances of becoming Governor of BoE I might now damage by quoting him approvingly!) said yesterday that people doubt banks values and whether banks have their interests at heart and went on to say that the Boards of directors and managers must introduce effective controls against dishonest behavior. in order to change the perception of bankers. My Lords, this amendment seeks to ensure providers act in the best interests of clients which would be just one way of guaranteeing that good behaviour for which the FSA Chair awaits. My Lords, why should only consumers accept responsibility for their own decisions? Why not regulated firms and authorised persons? It is as if the Bills draftsmen are at pains to ensure that consumers should have only themselves to blame. If this phrase consumer responsibility is to mean more than the current legal position, then the Noble Lord the Minister needs to explain what that is. If it is only common law, why include it? ENDS