Clause 16 - Injunctions and interdicts
Pensions Bill
4:45 pm

Mr Nigel Waterson (Eastbourne, Conservative)

I beg to move amendment No. 134, in

clause 16, page 10, line 3, leave out 'a reasonable likelihood' and insert 'strong prima facie evidence'.

Mr Win Griffiths (Bridgend, Labour)

With this it will be convenient to discuss the following amendments:

No. 135, in

clause 16, page 10, line 6, leave out 'a reasonable likelihood' and insert 'strong prima facie evidence'.

No. 136, in

clause 17, page 10, line 19, leave out subsection (2).

Mr Nigel Waterson (Eastbourne, Conservative)

We are now moving almost imperceptibly towards the more serious regulatory weapons that the regulator can deploy. This clause addresses injunctions and interdicts. I assume that an interdict is a creature of Scottish law. It sounds pretty horrendous, although I am unsure whether it involves torture or has any other physical manifestations; I

think that it is the equivalent in Scottish law of an injunction.

As we proceed through this part of the Bill, the official Opposition need to start getting more serious about the safeguards that we want to build into the legislation. Amendment No. 134, which is echoed by amendment No. 135, seeks to remove the phrase ''a reasonable likelihood''. I have not yet had the opportunity, probably because I was too busy printing the regulatory impact assessment, to go to the law section of the Library to check the legal definition of ''reasonable likelihood'', but I am sure that the Minister has it at his fingertips and will be able to give us some precedents and to explain what it means. What is the level and burden of proof that is needed for a person to be brought within what is quite a serious provision?

To be on the safe side, our amendments propose to remove those words and to replace them with ''strong prima facie evidence''. It seems to me that, on any view, that test must be higher than ''reasonable likelihood''—a phrase that I have not come across much in my legal career. [Interruption.] I am sure that it will turn out to be some ghastly Tory wording from the Pensions Act 1995, but that does not make it right. If there is a risk of an injunction, or an interdict north of the border, a fairly high standard of proof is needed. Lawyers are comfortable with the formula ''strong prima facie evidence''. I am sure that there are other ways of setting out the burden of proof that is required, but this is a serious issue, and there should be a defensible and significant threshold that the prosecution, whether north or south of the border, has to reach in terms of evidence.

Despite the possible origins of the phrase ''reasonable likelihood'', it does not strike me as enough. There are gradations of regulatory tools in the Bill, and this is quite a serious one. If people can be dragged into court on the basis of such an application, there should be a pretty stiff test not only in terms of the case itself but in order to make it clear to the regulator, as much as to anyone else, that he will rarely be expected to reach for this weapon in his armoury.

Mr Malcolm Wicks (Minister for pensions, Department for Work and Pensions; Croydon North, Labour)

The effect of amendments Nos. 134 and 135 would again be to inhibit seriously the regulator's power to apply for an injunction to prevent the misuse or misappropriation of scheme assets. ''Reasonable likelihood'' is the same standard of proof contained in the power to apply for injunctions under the Pensions Act 1995, although that protection was extended only to members of occupational pension schemes. The Bill extends it to personal pension schemes, so it is an advance. It means that the regulator has to prove to the court that there has been a reasonable likelihood that there has been or will be a misuse or misappropriation of scheme assets.

That is a standard well known to the courts and commonly used for regulatory intervention via injunctions. For example, it is the same standard to which a court must be satisfied to grant applications to the Financial Services Authority. Of course, the courts will exercise the usual safeguards to protect the rights of any directly affected parties, and they have held that what is required for reasonable likelihood is a ''good

and arguable'' case. The power to apply for an injunction is a vital tool in the regulator's armoury.

Mr Nigel Waterson (Eastbourne, Conservative)

I do not know whether the Minister has this information at his fingertips; if not, he is welcome to write to me. I am curious: since the 1995 legislation came into effect—in April 1996, I think—how many injunctions have been applied for, and how many have been granted?

Mr Malcolm Wicks (Minister for pensions, Department for Work and Pensions; Croydon North, Labour)

My understanding is that OPRA has only used the power once. Nevertheless, we believe that now is not the time to remove it from new legislation.

The power to apply for an injunction is a vital tool. Changing the standard of proof to one not recognised by the courts would mean that it would be less useful and that the regulator would not be able to act quickly to protect members' benefits. Clause 17 would extend to members of private pensions the protection currently afforded to occupational scheme members under section 14 of the Pensions Act 1995. That protection stems from the restitution of assets, in a case in which there has been misappropriation, to restore the parties concerned to the position in which they were before the misuse or misappropriation occurred.

Subsection (2), which the amendment seeks to remove, defines who can be considered to have been involved in the misappropriation. Removing the subsection would render clause 17 invalid and unworkable, and deprive those in receipt of private pensions of that extended protection. I ask the hon. Gentleman to withdraw the amendment.

Mr Nigel Waterson (Eastbourne, Conservative)

I am still a bit bemused about why this is meant to be a vital or useful tool if it has only ever been used once by OPRA.

Mr Malcolm Wicks (Minister for pensions, Department for Work and Pensions; Croydon North, Labour)

It is a deterrent.

Mr Nigel Waterson (Eastbourne, Conservative)

The Minister says that it is a deterrent. I suppose that the fact that we have not had a thermo-nuclear war means that that deterrent must have worked, so presumably this one has. Having said that, what the Minister said confirms my earlier comments: the remedy will be used sparingly by the regulator, certainly if it is anything like the old regulator. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.