Category: Press Releases

The press release issued by HM Treasury on 30 April 2001.

The Treasury today confirmed the dissolution of the Insurance Brokers Registration Council (IBRC), the body previously responsible for insurance brokers’ professional standards.

Instead the industry will be regulated by the General Insurance Standards Council (GISC).  The GISC, unlike the IBRC, is open to all insurance intermediaries and will set its own standards of business practices.

The move forms part of the planned overhaul of financial services regulation by the Treasury.

Economic Secretary to the Treasury, Melanie Johnson said:

“The new regulatory arrangements represent a major step forward for the general insurance broking industry.  Brokers of general insurance will now be able to operate free of the red tape they were previously burdened with.

I welcome the establishment of the General Insurance Standards Council and the move by the industry to set its own standards.  I am also grateful for the work of the IBRC in ensuring an orderly run down of its operations.”

NOTES FOR EDITORS

The change relates to general insurance only, e.g. home and travel insurance and not long-term investment-based insurance, e.g. life assurance.

The IBRC was set up under the Insurance Brokers (Registration) Act 1977(IBRA).  IBRC regulated the use of the title ?insurance broker? and maintained professional standards among those intermediaries that used it.

But this was seen as incompatible with the Government’s move towards a single financial services regulator.  There were also a number of flaws such as the fact that the IBRC captured only those who chose to trade as insurance brokers, but not the many other general insurance intermediaries.

In early 1998, the Treasury consulted on the future of the IBRC.  Most of those responding said that voluntary regulation offered the best prospects for improving standards of conduct among general insurance intermediaries.

The then Economic Secretary, Helen Liddell, announced (in July 1998) the repeal of the Insurance Brokers (Registration) Act 1977, and consequent abolition of the IBRC.

The industry has now set up the General Insurance Standards Council (GISC) a voluntary body to carry on many of the IBRC’s tasks.

The Financial Services and Markets Act 2000 (FSMA) repealed the IBRA and the IBRC’s dissolution was put into effect under two Statutory Instruments – SI/2001/1283 (the main Dissolution Order) and SI/2001/1282 (a Commencement Order).  The IBRC ceases to exist today.

The Treasury is to take over the assets and liabilities of the IBRC.

As a result of this change, insurance brokers will no longer be exempt from the Estate Agency Act 1979 which regulates the activities of estate agents in the buying and selling of property.

The press release issued by HM Treasury on 10 May 2001.

UNCERTAINTY OVER FOR CHESTER STREET VICTIMS

The uncertainty of asbestosis sufferers and their families whose expectation of compensation was thrown into doubt by the insolvency of Chester Street on 9 January this year will soon be over thanks to a partnership between the insurance industry and Government.

Andrew Smith MP, Chief Secretary to the Treasury, said:

?This is good news for asbestosis sufferers and their families whose personal tragedies were made even worse by uncertainty over whether they would receive the compensation they were due following the collapse of Chester Street. It is also an excellent example of partnership between Government and the private sector, in which the Government is meeting its liabilities to former public sector employees and the insurance industry is covering claims from former private sector employees.

?I would like to pay tribute to the constructive and cooperative approach taken by the insurance industry, who have shown great flexibility in dealing with a very complex legal situation?

Concerns had been raised over the position of employees whose private sector employer insured with Chester Street and no longer exists or is insolvent, and whose injury was sustained during employment in the private sector before 1972 (1975 in NI). There were fears that these individuals would not receive the compensation for which their employers would have been liable.

However, the insurance industry will fund compensation to those individuals in the following circumstances.

The Policyholder’s Protection Board (PPB) will make payment in accordance with their statutory powers if the compensation award was made prior to Chester Street’s insolvency on 9 January 2001.

If the award was made on or after 9 January, the insurance industry will fund equivalent payments pending the implementation of the new industry funded Financial Services Compensation Scheme (FSCS), planned to come into effect no later than November this year. The Financial Services Authority (FSA) have been asked to explore rules to cover employee third party rights in employer liability cases to ensure that in cases where both the employer and the insurer are insolvent, victims receive compensation. The Government will itself fund the compensation owed to former employees of public sector companies for whom it is liable.

The arrangements outlined above apply only when the employer no longer exists or is insolvent. Where the employer still exists, or its liabilities have been carried forward to another company, that company or firm are liable to pay the compensation award.

Andrew Smith was responding to a Parliamentary Question from Tony Worthington MP (Clydebank & Milngavie).

The press release issued by HM Treasury on 21 May 2001.

UK ADOPTS REGULATORY CO-OPERATION WITH ARGENTINE FINANCIAL SERVICES SECTOR

UK and Argentina have signed a Memorandum of Understanding which will ensure greater co-operation in tackling the abuse of financial rules and regulations.

The agreement was signed by Miss Melanie Johnson, Economic Secretary to the Treasury, Sir Howard Davies, Chairman of the Financial Services Authority, and by Mr Carlos Weitz, Chairman of the Comision Nacional de Valores of Argentina.

The Memorandum of Understanding also opens the way for UK investment service firms to access the domestic Argentine market, and for Argentine securities to be traded on the UK exchanges. The volume of cross-border business should rise accordingly to the benefit of UK and Argentine investors and markets.

The press release issued by HM Treasury on 4 July 2000.

The Treasury today exercised its powers under the Financial Services and Markets Act 2000 (the Act) for the first time.

An order has been laid before Parliament specifying that Schedule 21 to the Act, which amends the application of parts of the Financial Services Act 1986 to self-regulating organisations recognised under Chapter III of Part I of, and Schedule 11 to the 1986 Act, will apply in relation to the Personal Investment Authority (PIA) and Investment Management Regulatory Organisation (IMRO) from 25 July 2000.

Economic Secretary Melanie Johnson said:

“This order will allow the new single regulator for financial services, the Financial Services Authority (FSA), and the PIA and IMRO to take practical steps to prepare for the bringing into force of the Financial Services and Markets Act.

“By ending the power of the FSA to make compliance orders or revoke recognition, it will allow the boards of PIA and IMRO, companies limited by guarantee, to bring into force amendments to their constitutions to make them subsidiaries of the FSA. This means that from 25 July 2000 the power of appointments to the Boards can be passed to the FSA, and the FSA can be admitted as a member so as to facilitate winding up of the companies in due course.

“The moves are fully supported by both PIA and IMRO, with the backing of their members. This is a small but important development that will enable further integration to take place between the regulators concerned. It is a mark of our shared commitment to deliver the wide ranging benefits provided under the FSMA 2000 as early as practicable.”

The press release issued by HM Treasury on 5 July 2000.

A £1 billion investment in buildings, laboratories and equipment for science research was announced by Chancellor Gordon Brown, Trade and Industry Secretary Stephen Byers and Education Secretary David Blunkett today. Also announced today is new money for science and engineering PhD students.

The new two year Science Research Investment Fund partnership between Government and the Wellcome Trust will mean Government investment in science infrastructure of £325m in 2002/3 and £450m in 2003/4. The Wellcome Trust will provide £225m to support biomedical research.

This is additional to the settlement for science in the previous comprehensive spending review, including a Government/Wellcome Trust Joint Infrastructure Fund (JIF) for universities of £750m, which runs until 2001/02.

Speaking at a conference of UK and US entrepreneurs in London, Mr Brown said:

“The commitment to science must mean constant renewal and modernisation of our science base. The scale of this investment is unprecedented, ensuring world class facilities for world class science. I am most grateful to the Wellcome Trust”.

Stephen Byers said:

“We have world class scientists in the UK. They rightly deserve world class facilities and this is exactly what we are now delivering. This unparalleled partnership will mean that scientists in the UK will have the facilities to be at the cutting edge of research worldwide. Following on from the Joint Infrastructure Fund we set up with the Wellcome Trust in 1998 this will enable us to repair the damage done in previous decade.”

Wellcome Trust Director Mike Dexter said:

“Our collaboration with Government is already delivering crucial new investment to the UK’s universities. There is a great deal more to be done to keep UK science at the cutting edge, and I am proud that Wellcome has again been able to partner the Government to achieve that”.

The fund steps up Government’s commitment to modernising the science base. It reflects the findings of the science research cross-cutting review that – despite the positive impact of JIF – further major capital investment is needed. Consultation with universities showed that this was one of their most pressing concerns. As well as universities, Government research institutes and large national science facilities will benefit from the new fund.

The Chancellor also announced an uprating in PhD stipends for science and engineering postgraduate students. Basic stipends, outside London currently £6620 a year, will rise to £6800 in the coming academic year, to £7500 at the beginning of the 2001/02 academic year and to £9000 by academic year 2003/4. This is a 23% increase in real terms.

The Chancellor said:

“Alongside physical capital it is vital that we invest in human capital. Postgraduate researchers are the lifeblood of our science base. This investment will ensure that we continue to attract the finest minds into Phd programmes”.

David Blunkett said:

“This is investment that will keep Britain in the lead in research. We have a proud record. The Government is committed to sustaining our position. This is excellent news for universities and for the research teams themselves.”

The press release issued by HM Treasury on 11 July 2000.

Increases of up to 30 per cent in their retirement nest egg and greater freedom in their working lives could be possible for some personal pension savers using the new individual pension account (IPA), Economic Secretary Melanie Johnson said today.

The new IPA will particularly benefit those on moderate incomes, including part time workers, and those taking family or educational career breaks. It will enable the millions of pensions savers to have better, more flexible pension arrangements, which will be ideal for use with stakeholder pension schemes.

Miss Johnson and Social Security Secretary Alistair Darling today published a joint paper outlining the key features of the IPA, and seeking views on a small number of issues remaining following earlier consultation with pension providers and pension savers’ representatives.

Welcoming the paper, Miss Johnson said:

“IPAs will offer many thousands of personal pensions savers new freedom to plan and diversify their working lives They can take time off work or change jobs, possibly several times, without losing out on retirement savings as a result.

“IPAs will be suitable for many people on moderate incomes. They may be particularly helpful to women, who are more likely to take part time employment or to take career breaks when starting a family, or for those returning to education or training courses. Both those individuals and the economy will gain from the benefits IPAs offer.

Pointing out their suitability for long term pensions planning and use with stakeholder pensions, Mr Darling said:

“We want more people to save for their retirement. The IPA complements other reforms such as the new stakeholder pensions. We wanted everyone to have the right options for them and the IPA gives more choice for saving.”

Both IPAs and stakeholder pensions will become available in April 2001. Case study examples of the potential to enhance the value of pensions for those seeking flexibility in their working career are attached.

The advantages of IPAs in pensions saving include a simple charging structure, spread investment risk, security, transparency, and better understanding and confidence in equity investment. The IPA concept was based in part on the popular and successful US s401(k) savings scheme, which has encouraged savings generally, and equity savings in particular.

The development of IPAs marks a key stage in delivering the Government objective of providing secure, flexible and value for money pensions. The paper published today shows how IPAs will work and the steps the Government will take to ensure their availability when stakeholder pensions are launched in April next year. The areas covered by the joint Treasury and DSS paper include:-

• the IPA concept
• how it works in practice
• moving pension scheme with IPAs
• using IPAs for stakeholder schemes
• the legislative framework
• points where further views would be welcome.

Movement of IPA investments between savings schemes will be made easier by the introduction of a relaxation of stamp duty reserve tax rules to put IPAs on the same footing as pension savings in life insurance based products.

The press release issued by HM Treasury on 11 July 2000.

A Treasury-led review published today by the Chief Secretary, Andrew Smith, says much more needs to be done to reduce the incidence of ill health retirement across around 4 million employees in the public sector.

Its 36 recommendations include:

• employers should have active procedures and measures for managing sickness absence bolstered by effective policies to promote health in the workplace
• redeployment is always considered when existing duties are contributing to an employees’ ill health
• ill health retirement should only be granted when an employee is incapable of working until normal pensionable age
• inability to carry out existing duties is too narrow a test for an ill health pension
• greater consistency and rigour is required in the medical assessment process
• Service Delivery Agreements agreed in the 2000 Spending Review should set targets for reductions in ill health retirement

  The report shows ill health retirement:

• costs the taxpayer £1 billion a year
• runs at 22,000 a year
• peaked in the mid – 1990’s at 40,000 a year, but is still at historically high levels
• varies widely both between the rates in different sectors and between employers in the same sector

Mr Smith said:

” Early retirement should be available on genuine medical grounds where there are good reasons, but levels are higher than they should be. We are determined to bring them down to deliver a fair deal for the taxpayer and the people who depend on public services.

“The overall rate of medical retirement is higher in the public sector than in the private sector. And the variations in rates between sectors, and between employers in the same sector, are so significant that there is clearly scope to bring the rate down. This will help employees as well by ensuring employers adopt best practice to protect their health.

“The report sets out thirty six recommendations for tackling this issue. It is important that they are followed through vigorously across the public sector. Ill health retirement costs the taxpayer £1 billion each year. We need to divert those resources which are used unnecessarily to fund medical retirements to front line services.

“I have asked Departments to draw up action plans for each sector implementing the recommendations. Targets will be set challenging the employers with the highest rates to reduce these to match those of the best in their sector.”

The press release issued by HM Treasury on 17 July 2000.

The Chancellor, Gordon Brown, today called for fast-track completion of the single European financial services market and called for a plan for a 2004 implementation date.

Proposing early implementation of priority measures, Gordon Brown said:

“A dynamic single financial market is key to achieving fundamental economic reform and prosperity across Europe.

“Businesses, including start-ups and SMEs, will benefit from deeper, more liquid capital markets, which in turn will deliver growth and jobs. And consumers and investors will benefit from more competition and innovation, driving down prices and delivering a wider and better choice of financial products.

“Today I have set out practical steps to reinforce the Financial Services Action Plan and deliver the strategic goal agreed at Lisbon – to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion.

“That is a goal worth striving for but there is a case to achieve it on an even faster track: with will and determination, we can have a genuine single capital market by 2003 and complete a single market in financial services by 2004, bringing economic prosperity to citizens and business across the EU.

“We must focus on measures which will deliver early benefits. And, in the spirit of our Lisbon goal, we must embrace competition, innovation and flexibility.”

Key proposals set out by the Chancellor in a paper published today include:

• fast-tracking priorities in the Financial Services Action Plan;
• bringing forward the target date by one year to 2004;
• speeding up the completion of the capital market – a new deadline of 2003;
• delivering a competitive financial services market based on mutual recognition of core standards to ensure the integrity of financial markets and protection of consumers;
• a framework which recognises diversity of regulatory approaches, is responsive to market developments and encourages co-operation and exchange of information between supervisors;
• developing clear indicators and measures of success – for example, of the depth and liquidity of capital markets and price differentials for standard financial services products.

The press release issued by HM Treasury on 24 July 2000.

Greater saver choice and more attractive, competitive savings products will be delivered more effectively as National Savings (NS) continues to modernise, Economic Secretary Melanie Johnson said today.

Welcoming the findings of the five-yearly review of the NS agency, Miss Johnson said:

“The review highlights the important part recent innovations in service delivery, have played in helping to make NS more efficient and more flexible. This includes the role played by outsourcing its operations.

“NS is now better placed than ever before to build on this achievement to modernise and adapt to the changing market it operates in. It now has the potential to match the best in the financial services market to the benefit of its millions of customers. But it will only realise that potential if it provides choice and good value products which savers want to buy in the very competitive savings market.

“I believe that NS now has an effective launching pad to develop and deliver those products. It must make best use of developing access technologies in e-commerce and telephone services, as well as by post and through Post Offices, to make sure that it remains an attractive option for savers.”

The review sees these developments as central to NS continuing to make a valuable contribution to the cost-effectiveness of the national debt by offering attractive products and services to members of the public. It will be set a clear and overarching objective to achieve cost-effective government debt management. NS, which will remain a government agency, funds a significant amount – over £62bn – of the national debt. Taxpayers will continue to see the benefit of the NS contribution, which is more cost-effective than comparable gilt-edged securities.

This is also good news for existing NS savers and for future customers. NS will be working to give its current and new customers more attractive, more up to date products and services. People will also get more choice on how they access those products. In addition to being able get NS products through the Post Office and by post as they do now customers will in future be able to choose from a wider range of channels.

The recommendations of the review will be taken forward in a new NS business strategy, and reflected in the framework document that governs the relationship between NS, the Treasury and Government. In taking forward its business plan, NS will give particularly close attention to the need to continue to modernise so that it remains relevant, efficient and cost-effective, and continues to develop new products as well as embracing new innovations and ideas.

Recognising the contribution of NS staff to recent developments, Miss Johnson added:

“This is an exciting vision of the future for NS, which the agency is now working to make a reality. All NS staff and those working with NS, can rightly be proud of the impressive transformation that has been achieved in recent years. The scene is now set for this spirit of improvement and innovation to continue building a modern, best-practice organisation that can succeed for many years to come.”

The press release issued by HM Treasury on 4 August 2000.

In accepting Don Cruickshank’s report Chancellor Gordon Brown announced a package of new measures to improve competition in the UK banking market and deliver benefits to consumers.

Announcing the Government’s detailed response to Don Cruickshank’s wide-ranging report on improving competition in UK banking markets, Gordon Brown said:

“Don Cruickshank’s report is a major milestone in improving competition and ensuring that consumer benefits are central to banking services. In accepting the report’s recommendations, we are determined to drive competition forward and deliver real improvements for personal and small business customers.

“Too often banks and other financial services providers have been slow to give consumers the information they need to make informed choices and make the most of developing competition, new technologies and new products.

“Banking services, like every other sector of the economy, need to be exposed to the full rigours of competition. We aim to achieve this through reforming regulation, opening up payment networks and eliminating any special treatment.”

The Chancellor and Don Cruickshank have discussed the Government response in some detail. Don Cruickshank welcomes the Government’s plans for action across a wide range of the recommendations.

Measures announced today include:

• CAT standards for credit cards together with emphasis on disclosure of key terms and conditions
• Consultation on extending CAT standards to other financial services products
• review of self-regulatory mechanisms such as the Banking Code to ensure they deliver sufficient consumer benefits
• encouraging comparative tables of banking products and complaints against financial services firms.

The Government Response to the Cruickshank Report also includes announcements on progress in a number of key areas to meet the aim of improving competition in banking services.

Payments

– work is continuing to introduce a payments regulator through primary legislation to open up networks and oversee access charges for bank customers.

– consultation on detailed proposals to establish a licensing system for payment systems.

– a payments strategy for all Government Departments to ensure a coordinated approach in modernising government and responding to developments in and the introduction of e-commerce.

The Response also summarises significant progress in reforming charges and access to the cash machine network (LINK), including opening up the ATM network to non-bank providers, banning double charging for ATM withdrawals, and reform of wholesale charging structures. It outlines further work in progress, including OFT review of the LINK and MasterCard schemes.

Regulation

– a wide-ranging review of the Financial Services and Markets Act two years after implementation to monitor its impact on competition in financial services.

– the review will also monitor the effects of regulation and policies introduced by the Government.

– steps to improve transparency and disclosure in the supervision of financial institutions.

– ensuring that the Government is not seen as giving special treatment to financial institutions in the development of Government initiatives.

– ensuring that Government, consumers and financial services providers are in the best position to take advantage of the opportunities presented by e-commerce.

– review of money laundering regulations to ensure that these are proportionate and minimise distortions to competition.

The Treasury has already acted by announcing an amended objective to ensure that competition issues will be central in its dealing with financial services. This is set out in the White Paper Public Service Agreements 2001 – 2004 published on 28 July.

Small and medium sized businesses

– ensuring that small businesses’ access to the financial services ombudsman is not restricted by the number of staff employed but determined by turnover.

– review of the proposed Banking Code for small businesses to ensure that it delivers sufficiently strong benefits to customers.

– encouraging the FSA to ensure that small businesses benefit from its work on comparative information and complaint handling.

– developing government information services to aid new entrants bringing competition to the small business market.

The Chancellor and Trade Secretary Stephen Byers announced referral of the supply of banking services to small businesses to the Competition Commission immediately on publication of the Cruickshank Report on 20 March. This work is already under way and the Competition Commission has been asked to report by June next year.

Thanking Don Cruickshank for his report, the Chancellor said:

“I very much welcome the hard work Don and his team put into the report. There is no doubt of the interest it has generated both here and abroad.

“The report lays firm foundations for the Government and the financial services industry to build on to develop one of the most competitive, dynamic and efficient financial services markets in the world.”