Baroness Noakes (Con)

My Lords, I thank all noble Lords who took part in this interesting debate. The big difference between what I have advocated and what the Minister has set out as the Government’s position is that she is describing what they hope to achieve by consolidation in the current market, but what I was trying to get at was future-proofing that market. Markets stagnate unless they are subject to the kind of pressures that ensure that they continue to develop. I mentioned that customer choice is one that we can largely discount in the context of this particular marketplace. So we need to look for the other classic ways in which markets improve themselves over time, which is why I look to the role of new entrants and innovation. The Minister seemed to suggest that that could occur between these new larger players that have been created, but I believe that is fundamentally wrong because those players have a lot of investment in systems and infrastructure, and they are not very interested in significant disruption. That is not an absolute rule, but if you look at the experience of the telecoms industry, media and almost any other industry, you get disruptors from outside the marketplace. That is why in financial services we have fintechs disrupting the financial service marketplaces at the moment in many different ways. Unless we are absolutely clear that we can facilitate that process of market disruption—it is to the long-term benefit of savers, because the markets will deliver those long-term benefits—we need to ensure that those markets stay vibrant. The pension provision market could easily seize up, broadly, with a smaller number of larger players dominating the pension provision market but not being subject to real competitive pressures because of all the hurdles put in the way of organisations that want to enter the market, whether via the new entrant pathway relief or via the regulations under Clause 43, which will squash them. There is a fundamental difference between us on this side of the Committee and the Government. I am not at this stage challenging whether getting to a smaller number of larger players is the right answer—I accept that for the sake of argument—but I am concerned with making sure that the pension provision market itself has the right incentives within it to ensure that it remains relevant for the purposes of improving and protecting savers’ returns in the long term. I have to say to the Minister that we will return to this in one way or another on Report because it is a really serious issue. I am absolutely not convinced that TPR’s arrangements —there is no reference to the pension provision marketplace in TPR’s powers and responsibilities—can be set alongside the FCA, which has to operate in a clear pro-competition environment. I do not think that is the right approach either, and I am not convinced about TPR’s approach to innovation, which is again about the existing players in the market rather than how you encourage new players. That has been done pretty successfully in the context of the FCA and the PRA for banking and insurance markets, by positively hand-holding new entrants and helping them through the whole process so that they can operate against the big boys. It is important that we allow little players to come and challenge the big players, because that is what produces the benefits in the long-term for consumers—for savers in this instance. I of course withdraw the amendment but, as I indicated, we have a fair way to go in this area.