Clause 23 - Validation of action in contravention of freezing order
Pensions Bill
10:15 am
Mr George Osborne (Tatton, Conservative)
I want to ask the Under-Secretary about something; he touched on it when he gave his explanation of clause 21, but as the power of validation is given in clause 23 I thought that I would wait until now to raise the point. Clause 21 addresses the consequences of the freezing order. As the Under-Secretary said, it states that
''any action taken in contravention of the order is void''.
That is reasonable. The whole point of the freezing order is to freeze things and to stop trustees and managers doing things that they should not do.
However, there is a get-out clause in clause 23. Subsection (1) states:
''If a freezing order is made in relation to a scheme, the Regulator may by order validate action taken in contravention of the order.''
In other words, someone could, in effect, break the law; they could break the terms of the freezing order but have their action made legal retrospectively. Will that not run the risk of encouraging some trustees and managers to break those terms in the hope that the regulator will subsequently validate their actions? That may be a false expectation; they may be over-confident of their abilities—or they may be genuinely concerned, because these provisions deal with schemes that are in a mess. However, will not clause 23 give them an
excuse to break the terms, and therefore undermine the whole point of the new power?