Clause 64 - Codes of practice
Pensions Bill
10:00 am
Mr Nigel Waterson (Eastbourne, Conservative)
These two amendments are inspired by the Association of British Insurers, which may well have briefed other Committee members too, so they will know what the thrust of my amendments is. Both amendments welcome the idea that there will be codes of practice; no one argues about the principle that codes of practice are worth having. However, in connection with clauses 64 and 65, there should be a draft analysis of the costs and benefits of the codes. That seems only sensible, and in line with best practice. The Bill allows the regulator to issue codes of practice covering a whole range of issues—indeed on any issue, really, as long as it is related to pensions legislation. However, the concern of the Association of British Insurers—and, I am sure, many other outside bodies—is that any such code should reflect the targeted and proportionate regulatory regime that everyone wants, and which the Minister spoke of in this context. Codes should promote good practice among those providing pensions; hence the requirement that, attached to any code, there should be an analysis of the costs and benefits of the regulator's guidance.
In theory—but not, one hopes, in practice—the regulator could use the codes of practice in a way that would both impose large cost burdens on those providing pensions and deliver minimal or nil benefit, in terms of information and security, for the members of those pension schemes. It is worth bearing in mind the principle of proportionality, which is one of the Better Regulation Task Force's five principles of good regulation.
It is interesting to note that under the relevant legislation, the Financial Services Authority is required to undertake and publish cost-benefit analyses of proposed rules and guidance. I can think of no good reason why the same rules should not apply to the new regulator—and if my luck holds, perhaps the Minister will agree.
On a more general point, it is important that any powers or functions with which we endow the regulator have the full support and consent of the industry. It is important that the industry does not feel at all threatened by any potential extra costs attached to any such codes of practice. It is important that we demonstrate to the industry, through this and possibly later amendments, that the regulator will not only look carefully at the need to root out problems in pension schemes, but will ensure that there is not a mass of unnecessary regulation in the codes of practice, providing little benefit and putting extra burdens on business.