With this we may consider Lords amendments 5 to 8, 9 and amendment (a) thereto, 10, 11, 14 to 18 and 28 to 38.
We move to the final group of amendments and, as I mentioned earlier, we urge the House to agree with their lordships in all of them. For reasons that I shall explain, we do not accept Opposition amendment (a) to Lords amendment 9.
I shall run through the categories of amendment before us. I shall deal at the end with the charges and disclosure amendments, where there appears to be the remaining lack of agreement. I apologise in advance for the fact that it might take me a moment or two to work my way through the amendments as some of them are quite technical, but at this stage in our proceedings it is important not simply to nod these measures through. In some cases quite substantive changes were made in another place—welcome changes, we believe, but they are ones to which this House should give proper scrutiny.
I shall begin with amendments 5 and 6 and then 4, which relate to automatic enrolment. It is worth putting on the record that automatic enrolment is already a huge success story, with 3.2 million people now enrolled. I had the pleasure last week of visiting Upton Park to meet someone who I am told is the three millionth person to be automatically enrolled. I have my doubts, but one never knows. I have to declare in some sort of register somewhere that I was given a West Ham shirt with the squad number 3 million on the back, which may be my transfer fee—I do not know. We have certainly reached an important stage in the process. It is one of the almost unsung success stories of this coalition Government to implement automatic enrolment in an effective way, to see more than 3 million brought in and to have very high levels of staying in—of the order of 90%—which means that getting on for 3 million people are now in workplace pensions who were not in such pensions just a couple of years ago. All the signs are that this will continue to be a success.
But ongoing success is dependent on being able to learn as we go and to make changes where necessary, and amendments 5 and 6 are tabled in that spirit and relate to defined benefit schemes. In general, DB schemes are high-quality pension schemes provided by employers who take pensions seriously, and we would not want employers to feel that they could not use a DB pension scheme for auto-enrolment because of some technicality or because in some way we provided a higher hurdle for a DB pension scheme to be used for automatic enrolment than for a defined contribution scheme. Amendments 5 and 6 allow for simpler alternative quality requirements for employers providing good quality DB schemes.
The amendments will allow DB schemes to meet either the existing test for money purchase schemes, or a test based on the cost of future accruals. More work has to be done on adding the detail in regulations, and we look forward to working with our stakeholders on that. The simpler tests will help those employers providing good schemes to meet their automatic enrolment duties. This is important because of the end of contracting out. Contracting out itself had a set of standards that schemes that wanted to contract out had to meet, and once contracting out has gone and those standards have gone we can use the opportunity to set simpler equality requirements for employers wanting to use DB schemes. I hope that that will be welcomed by the House.
Also in the context of making automatic enrolment work, amendment 4 relates to the power to ensure that employers do not have to enrol individuals for whom it makes no sense. We tabled a clause at the beginning of the process that would give us the power to exclude a small group of people where it would not make any sense for employers to have a legal duty automatically to enrol them. For example, employers said to us that they had employees who were high earners or who had exhausted their lifetime tax limits and had some protected or enhanced status who were asking not to be put into a pension scheme because that could jeopardise their tax status, and having been auto-enrolled they would have to opt out straight away. That would be a waste of employers’ and employees’ time. If they failed to opt out, they could lose valuable tax protection, which would create unnecessary bureaucracy for the employer and hassle for the employee, and we do not want to do any of that when it comes to auto-enrolment.
We always envisaged that we would exclude tightly defined and limited categories of employees from the auto-enrolment duty. Following consultation, we have now indicated specifically which groups of people those are. I have mentioned those with tax protection status and another would be those on the brink of retirement or leaving. Someone might have said that they were about to leave the company, but the legal requirements on automatic enrolment or re-enrolment meant that the firm had to put them in the pension scheme, perhaps days before they left. Clearly, we do not want to bring automatic enrolment into disrepute. We do not want firms to be required to do things that are not common sense, that have a cost to the firm, perhaps create hassle for the individual and are unnecessary, and we always envisaged that the exceptions would be limited in scope.
When we first discussed the provisions, Gregg McClymont got very excited about the Beecroft report and he called this the Beecroft clause and thought that we would use it to drive a coach and horses through auto-enrolment, exclude small firms and all the rest of it. We assured him that that was not our intention, but I sense that he did not believe us. In another place, we have chosen to make it clear, through amendment 4, that this power cannot be used to exclude an employer on the basis of size, whether that is the number of employees, turnover, VAT liability or whatever. It was never our intention to exclude these people. Faced with the ongoing, almost universal cynicism of the Opposition, we thought it best, for the avoidance of doubt, to put that in the Bill.
The hon. Gentleman sought such an amendment earlier in our proceedings, but we chose to do this in a cleaner and more precise way, simply so that people can be confident that the Government believe that automatic enrolment is—dare I use the phrase?—for the many, not the few. The process continues right down to firms that employ one person. Just because not many others work with someone, does not mean that they do not need to have a decent pension. We do not think that anyone should be excluded.
We accept that there are costs and burdens to small firms undertaking automatic enrolment, but we believe that the best way to address those is through amelioration measures of the sort that we have taken rather than by excluding them. For example, the National Employment Savings Trust is there to enable small firms to have somewhere to go to that has a public service duty to take their business, that has been designed with smaller firms in mind—obviously it is a significant provider at the larger end of the market—and designed to be easy to engage with for people who do not speak pensions, so it is jargon-free.
We have taken a number of other measures to ameliorate the position for smaller firms. For example, we have changed the phasing of the roll-out of auto enrolment so that those that employ 50 or fewer will, in general, not have to auto-enrol until at least June 2015, or, in some case, a good while after that. We have introduced a waiting period of up to three months, which again will help smaller firms. Crucially—I know the Opposition have objected to this—we have raised the trigger threshold to £10,000 a year from April 2014, which will mean a small firm employing perhaps one person on £7,000, £8,000 or £9,000 a year will not have to go through automatic enrolment. We believe that all of those measures are better ways of helping smaller firms than simply some sort of blanket exclusion. Therefore, amendment 4 makes it clear that that is not the way that we propose to proceed.
I will come back to the amendments on charges, because I think that that is the area of principal difference, and deal now with the other amendments in the group where there might be greater agreement. Amendments 28 and 29 relate to automatic transfers and what happens when somebody leaves a firm, leaving behind a small pension pot. We envisage that any pension pot of less than £10,000 left behind would fit our definition of a small pot. Their lordships debated whether our proposed model of automatic transfers, where the pension pot by default follows people as they change job, was the right model, or whether an alternative aggregator model—a home of lost pots model—would be a better bet. There was a high-quality debate where arguments were carefully made on both sides, and their lordships, by a large margin, with considerable Cross-Bench support, backed the Government’s position on this measure. So we will move ahead with our proposals for pot follows member, but we have to get the framework right to ensure greater consolidation. The Bill will provide that framework. Pot follows member will reduce the number of people with five or more dormant pension pots from one in four under the current system to one in 30. Our focus now is to work with employers, providers and consumer groups to deliver a safe and secure system.
It is clear that we should try to use the existing infrastructure where possible, including the existing PAYE system. As I told the House at oral questions on
One of the attractions of going down that route is that if HMRC already holds data on the jobs that people have had, for example in the previous 12 months, and could also hold matching data on the pension schemes of which people were a member, it would be ideal to look at existing data sources. However, we have to do a full cost-benefit analysis internally. For example, a new pension scheme might be able to look at the member’s previous employers over the past 12 months and at other pension schemes of which they were a member. The new scheme could then contact those schemes, check for stranded pots and pull them across by default, unless the member objected, and the costs could be recovered from the general levy under Lords amendment 29.
Lords amendment 28 is a technical change designed to clarify that the automatic transfer provisions can apply to those who are not yet in receipt of their pension but are eligible to have access to their benefits—that is, those who are over the age of 55.
The next set of amendments relates to the Pension Protection Fund compensation cap, which we introduced during the course of our proceedings in this House. We said at the time that it would be necessary to complete the primary legislative framework in the House of Lords, and that is what we have done. Lords amendments 32 to 34 provide further detail on how pensionable service, for the purposes of the cap, is to be determined in specific circumstances, such as when a person is a member of two separate but connected schemes.
I will explain why that is important. The change we have made to the Pension Protection Fund cap is designed to help people who have given long service. The cap prevents people from getting very high levels of Pension Protection Fund compensation and is designed to exclude in particular some of the high earners who might have been involved in decisions about the future of a company. It also captures people who are not gratuitously rich, but who have built up a substantial pension, perhaps through working for one employer for their entire working life. We do not think that the cap was ever meant for such people, so we have provided that, beyond 20 years, it should be increased at a rate of 3% per additional year. The definition of the length of pensionable service is important, which is why Lords amendments 32 to 34, which tidy that up, are necessary.
Lords amendments 37 and 38 deal with the application of a cap during the assessment period and wind up. They provide for the valuation of scheme liabilities if the scheme is in assessment when legislation is commenced. The valuation will continue to be based on the current cap, although members of such schemes will be paid using the new cap during the assessment period. The amendments also provide for schemes winding up when the legislation is commenced. They will allocate assets based on the current cap.
Lords amendments 35, 36 and 38 clarify details such as the transitional provision to be made for those who share compensation following divorce. The policy for people with a pension in their own right and a pension based on a pension-sharing order is that each is kept separate and capped separately. This is to the benefit of members. The Pension Protection Fund has been applying the current cap in this way.
Finally on the PPF cap, Lords amendments 10 and 17 deal with the change to the application of the existing cap on compensation from two sources of pension and bring legislation in line with policy and practice. The current legislation assumes that the cap is applied after the amounts are added together. Amendments 10 and 17 amend the legislation so that it reflects current practice, and this will apply retrospectively. As I have said, that is to the benefit of members.
Lords amendments 11, 15, 16 and 18—relate to the Public Service Pensions Act 2013. In layperson’s language, the amendments allow consolidation of schemes without loss of transitional protection. The 2013 Act reforms public service pension schemes and provides for transitional protection from that reform for members of public service pensions who were less than 10 years from their normal retirement age in April 2012. The Act also stipulates that, for the larger public service schemes, the individual needs to have been a member prior to that date in order to be eligible for that protection.
Lords amendments 11, 15, 16 and 18 create exceptions to that rule to allow members of smaller public service schemes to be transferred into a larger scheme without losing their transitional protection. The Government’s intention is to seek to make administrative and management savings by consolidating smaller schemes into larger ones. The amendments mean that that can happen with no impact on members’ benefits.
Finally, the substantive set of amendments are those led by Lords amendment 9 which relate to charging. Obviously, this is a contentious issue. We believe that their lordships have improved the Bill and we will urge the House to accept their amendments.
Making automatic enrolment work is not just about the employer duty; it is about ensuring that people are enrolled into high-quality schemes. I want to be absolutely clear, because no doubt there will be a lot of hand-wringing from the Labour party on this issue. When the previous Government put in place part of the necessary legislative framework for automatic enrolment, they put in place no quality standards at all for auto-enrolment schemes, bar the requirement to have a default fund—just to have one; there was nothing about charges or quality—and a minimum employer and employee combined contribution. It is pretty shocking that the previous Government thought it was good enough to put 10 million people on workplace pension schemes with no consumer protection at all. When hon. Members hear what the Labour shadow spokesman—the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East—has to say about this issue, they will imagine that Labour has somehow been riding to the rescue of the consumer. However, they should remember that when the legislation was first passed it was done with no regard, as far as I can see, for the position of consumers. There was no action on charges, no action on small pots or, to be frank, no action on anything.
The coalition Government are committed to ensuring that schemes provide good value for money and are well governed. Lords amendment 9, therefore, deals with the transparency of costs and charges, which we believe is vital for good scheme governance. We already have powers to require disclosure under the Pension Schemes Act 1993. However, for the avoidance of doubt, amendment 9 places a duty on the Secretary of State and the Financial Conduct Authority—I will come back to that, because it is an important point—to require the disclosure of costs and charges. The charges to be disclosed will be set out in regulations, and rightly so.
On amendment (a), the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East wants to put in primary legislation a shopping list of the charges he can think of. I think the House will immediately see the flaw in that. The hon. Gentleman would be the first to say that the financial services industry has been known to be creative—if we ban something, it will do something else—so what is the point of putting in primary legislation a list of the charges he can think of, saying that they should be disclosed and then adding, “and anything else”, on the end? Clearly, there could be a new category of charge at any point and we do not want to be governed by having to pass a new Act of Parliament every time there is a new charge on which we want to take action. We think that the charges to be disclosed should be set out in regulations because that approach gives the Government maximum flexibility to respond to a fast-moving market. That is why we do not agree with amendment (a).
Under Lords amendment 9, the duty is placed on both the Secretary of State and the FCA, which reflects the dual regulation of pensions and means that the FCA will consult on how and what to disclose, but not if costs should be disclosed. One of the many problems with the Opposition’s amendment (a) is that it would remove that duty from the FCA. I do not know whether that is accidental or deliberate. The amendment would leave the power solely with the Secretary of State, but with none of the sanctions available to the FCA. Just to be clear, amendment (a) would take the duty to consult on how and what to disclose away from the FCA and give it to the Secretary of State, but the Secretary of State does not have the powers that the FCA has. To be frank, that is a muddle. I know the Opposition will vote for their amendment because they tabled it and they want to make a point and tweet about it, but the substance of the amendment, even in terms of what the Opposition want to achieve, is deeply flawed, because it would take a duty away from a body that has a power and give it to the Secretary of State, who does not have that power.
I usually sound grateful to the hon. Gentleman for his interventions, but I am not sure I am for that one. There is a bit of a pattern here. Labour has already called one vote on an amendment that was flawed, but it decided to vote for it anyway in order to make a point. I am explaining why amendment (a) is flawed, even according to the terms of what the Opposition want it to achieve, and it is obvious that the message has hit home, given the tenor of the hon. Gentleman’s response.
I am grateful to my hon. Friend who, as chair of the all-party group on pensions, has great knowledge and expertise on these issues. We need to take forward the matter in partnership with the FCA. As he knows, the Pensions Regulator regulates defined benefit and occupational defined contribution schemes, while the FCA works on group personal pensions, for example, but we want to make sure that, as far as possible, parallel regulations apply to both. We will, indeed, consult on exactly what should be included. We certainly want to get a move on with it all, so we will move as fast as we can, but we want to do so in partnership with other regulatory bodies. I hope that that offers him the assurance he seeks.
We are working out how best to publish the information. Some have suggested that we should just bung it on a website. We obviously want meaningful information, not just to have tens of thousands of pension schemes recording vast amounts of data. We think that it is most important to make the information available first to the fiduciaries in any scheme—the people, whether the trustees or the independent governance committees, who act on behalf of scheme members—and that members should have the information in meaningful form, not just pages of gibberish. We have all seen how information that is required by law to be sent to scheme members can turn out to be more or less useless, because nobody ever reads it. We therefore have to think about the right formats in which to supply information to fiduciaries and to scheme members, and the right way to make the information public, and we are thinking that through at the moment. Disclosure on its own is not enough; powers in the Bill will allow the Government to regulate to control charges and to require minimum standards of governance.
A further ambiguity or slight inconsistency in amendment (a) is that it specifically requires the Government to restrict “transaction costs”. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East may want to intervene, because the Opposition have previously said that transaction costs should not be part of a cap, certainly at this stage. We therefore assume that it is a drafting error but if their position is now that transaction costs should immediately be part of a cap, perhaps he can explain why he has changed his mind.
Lords amendments 7, 8, 30 and 31 remove references to work-based schemes, which will allow us to extend the powers to closed schemes. That is important, because a legacy scheme review of old, closed and other schemes is currently taking place, and we will need a legislative route if it is necessary, following the voluntary approach of the Association of British Insurers, to review high-cost and legacy schemes. Finally, amendment 14 means that regulations under the powers will be brought forward as soon as practicable, which follows a recommendation from the Delegated Powers and Regulatory Reform Committee, and ensures that the regulations will be affirmative on the first use. Our full response to our consultation on such matters will be published soon.
This is another group on which we urge the House to agree with their lordships in all their amendments. The Lords amendments will make automatic enrolment work better, particularly for defined benefit schemes; ensure that small employers are not excluded; allow HMRC to recover the costs of pot follows member, if we go down that route in relation to involving HMRC; make the PPF compensation cap work; ensure that protections for public service pensioners are properly implemented; and implement the changes made in another place to require the disclosure of information, particularly on transaction costs. All the Lords amendments make the Bill better. I commend Lords amendment 4 to the House.
I rise to speak to amendment (a), but let me start with Lords amendment 4. In Committee, the Opposition argued strongly that clause 37, as drafted, was far too widely drawn and left a possibility that those with an agenda to exempt smaller businesses from auto-enrolment could do so. We therefore welcome the Government’s concession. Among the Minister’s rather curious language, he said that I “got very excited” and that there was “almost universal cynicism” from the Opposition, but within that odd framing, he has actually accepted what we said in Committee. That is very welcome, because it makes the Bill better.
Let us think about amendment (a) in the context of the wider debate. The issue of costs and charges for pensions has shot up the political agenda for obvious reasons. If the Government are enrolling millions of people into a pension scheme for the first time, they had better make sure that the schemes are all value for money.
I agree that the Government had better make sure that the schemes are value for money. Why, therefore, did Labour not legislate for that when it could have done so?
The Minister made that point in his speech, as he has done repeatedly, and he has now put it on the record again. Let me pick him up on something he said. In what has become his quite common style, he suggested that it was rather peculiar to give the Secretary of State powers to ensure that transaction costs are disclosed. However, he must be aware—in fact, he alluded to this—that the FCA already has powers to require transparency of transaction costs, but has never exercised them. Making the Secretary of State responsible does not mean that the Government should not use the FCA’s expertise. Indeed, the Government’s amendment states that the Secretary of State must consult the FCA when setting transaction costs for those pensions over which he wishes to retain responsibility, so why could the same model not be maintained for contract-based pensions? Of course it could be so maintained.
On the Minister’s suggestion that it is somehow peculiar in his world to list the transaction costs that must be disclosed in amendment (a), I have to tell him that we used Lord Lawson’s amendment in the House of Lords, where it was commended by Members on all sides, including by the Government spokesman, Lord Freud. [Interruption.] The Minister is mumbling, but he suggested that the amendment was peculiar, although Lord Lawson’s amendment was along exactly the same lines. I am afraid that the Minister is disagreeing not just with the Opposition, but with Government Members.
Let me say a little about our additions to Lord Lawson’s list. I make it very clear that our list of transaction costs is the same as that tabled by Lord Lawson in the Lords, with two additions—transaction costs in underlying funds; and interest on client cash balances or profits from stock lending retained by the fund manager. The reason for including such additional transaction costs is that it needs to be strongly signalled to the body setting the rule—whether the FCA or the Secretary of State—that those items should be declared.
Let us remember that the Investment Management Association has deliberately failed to include those items in its draft statement of recommended practice.
Amendment (a) should be discussed in that context, not the diversionary trail thrown up by the Minister. It is important that transaction costs in underlying schemes are disclosed because a transparency regime can otherwise easily be bypassed by any fund manager that operates multiple funds. The fund receiving moneys can simply use them to purchase units in another house fund. The IMA SORP recognises that the fixed charges in underlying funds should be reported, but it fails to apply the same principle to transaction costs, which is why they are laid down in the amendment.
The House should be aware of the wider context. The Government have previously left it to the fund managers’ trade association to decide what, if any, transaction costs should be declared. The IMA has put forward a draft statement of recommended practice, which would require fund managers to declare some transaction costs in their annual accounts. The SORP must be agreed by a Government quango called the Financial Reporting Council. The concern that the SORP failed to include significant types of transaction costs led a cross-party group of MPs and peers to write to the FRC to say that it would be inappropriate for it to agree to a statement of transaction costs that omits significant types of transaction costs. That was widely reported at the time. It is common knowledge that a number of critical submissions were made to the FRC. Unusually, those submissions were not released at the end of the consultation period, and we still await them.
I am always delighted to hear from the hon. Gentleman, but I must make progress.
To put the SORP of the IMA—the fund managers’ trade association—in context, the Government refused to accept Labour amendments in Committee and on Report that specified a non-exhaustive list of transaction costs that needed to be made transparent. The noble Lord Lawson then made it clear that the Government’s position was not acceptable. He said that it was like putting the fox in charge of the hen coop. He added that there is a reason why fund managers meet in Monte Carlo and pension fund trustees meet in Manchester. That was the context in which Lords amendment 9 appeared. Lord Lawson, who sits on the Government Benches, made it clear that he agreed with the Opposition, rather than the Minister, who has failed to get to grips with the disclosure of transaction costs. That is the context in which this debate has been taking place for the past year and a half.
Lords amendment 9 does not state which transaction costs will be included. It gives the Secretary of State the right to include
“some or all of the transaction costs”.
It also allows the Secretary of State to not require full transparency in contract-based defined contribution schemes—those that are provided by insurance companies —if the transparency regime is “equivalent”. Lord Freud, speaking for the Government, emphasised that those words were intended to ensure that no costs were missed and that they were not an attempt to water down the regime for contract-based DC pensions.
Lords amendment 9 removes the responsibility to set transparency rules for workplace DC pension schemes from the Secretary of State and gives that power to the FCA. The FCA does not currently require the publication of transaction costs for workplace pension schemes. Its view is that any transparency requirements should be identical to those for retail investment products.
Is not the key point that is under discussion whether the list of charges to be covered should be included in the Bill? We agree that there are many issues of detail, especially on the transaction side, that should be consulted on. The Minister has said that that will happen. The hon. Gentleman has not answered the central question of why the list should be included in primary legislation.
The answer to the hon. Gentleman’s question is that nobody who looks at this matter reasonably can have confidence that the Government will deliver the disclosure of any transaction costs. The only reason we have the inadequate Lords amendment 9 is that there was a rebellion among Conservatives in the House of Lords that was supported by Cross Benchers. Before that, the Government had no intention of disclosing transaction costs, as far as one could see. To answer his question, amendment (a) is a way of ensuring that the Government deliver what they say they want to deliver.
To sum up, the Government have brought forward in the Bill a hard, fast, rapid wind-up of the state second pension. If that is to be successful for those who can no longer accrue into the state second pension, there must be similarly speedy action to ensure that there is an adequate, meaningful pensions cap as quickly as possible. Alongside that pensions cap, all transaction costs must be disclosed. Before the campaign by the Opposition and, more recently, Lord Lawson, the Government had been very slow to get to grips with the disclosure of transaction costs, never mind the pensions cap. The intervention of Lord Lawson has led the Government some of the way down the necessary path towards ensuring that there is disclosure of transaction costs, but they have got to that stage only because of the threat of a rebellion in the other place.
Amendment (a) would ensure that all transaction costs were disclosed and that the Secretary of State had the authority, power and obligation to ensure that that happened, rather than the FCA, which has shown no interest in disclosing any transaction costs. If we are to have decent workplace pensions to replace the income that is lost through the hard, fast wind-up of the state second pension, all these things must be disclosed. In this day and age, it is simply not good enough to say that those who are involved in pensions should not be aware of all the costs and charges that are extracted by fund managers. For that reason, I commend amendment (a) to the House.
I will respond briefly to the hon. Gentleman. However, I suspect that he decided to press for a vote on amendment (a) a good deal earlier this afternoon, so I do not think that anything that I say will have the power to change his view.
For the record, the hon. Gentleman seems to be confusing a power and a duty. He says that the FCA has the power to require transparency, but it has not done so. If he reads Lords amendment 9, which I encourage him to do, he will see that it states in subsection (2):
“The FCA must make”.
That is the bit that he wants to take out—the bit that requires the FCA to do the thing that he wants it to do—so his amendment (a) is incoherent. Instead, he would give the duty to the Secretary of State, but the Secretary of State does not have the same powers as the FCA over the schemes that it regulates. The hon. Gentleman wants to take the duty away from the body that has the sanctions and give it to somebody who does not have the sanctions. That would not achieve what he wants to achieve.
The text of Lords amendment 9 is before the House. The whole point is that we want all sorts of pension schemes—those that are regulated by the Pensions Regulator and those that are regulated by the FCA—to ensure that there is effective disclosure. His amendment (a) is defective because it would take the duty away from the FCA, which regulates one category of schemes, and give it to the Secretary of State, who does not have the sanctions to enforce the very thing that he wants to happen. I know that he does not care that his amendment is flawed, because he wants to make a point, rather than to pass good law, but for the record, his amendment would fail to achieve what he says he wants.
The hon. Gentleman said that the noble Lord Lawson, who has made a valuable contribution to this debate, came up with a list and that we should therefore have a list. Of course, the noble Lord Lawson did not pursue his amendment because he accepted that we did not need all the detail in primary legislation. If the hon. Gentleman lists the name of a charge in primary legislation, all it would take is for the ever-inventive investment industry to give it another name and we would need regulations anyway. Including a list would achieve nothing.
The hon. Gentleman asked about the words “some or all”. To clarify, the intention is to require full disclosure of all costs and charges. The reason for that wording is that it will future-proof the legislation—something that he has called for—by providing the flexibility to deal with new costs as they arise. That is all that we are trying to do by using that wording.
The hon. Gentleman will know that the FCA is regulated by Ministers from the Treasury, rather than the Department for Work and Pensions. However, I have met the FCA on a number of occasions, as have my Treasury colleagues, and we have corresponded on these matters. We are agreed that there should be full disclosure, as under the terms of the Bill, of all categories of pension scheme that are covered by the legislation.
The hon. Gentleman avoided the question I asked on an intervention. His amendment (a) appears to contradict what he has said in the past, and it brings transaction costs into the scope of any potential charge cap. That was not his policy this morning, but it appears to be his policy this afternoon. Quite how he would set such a cap when we do not have the data on transparency is beyond me. Clearly, amendment (a) is not about how the law of the land should be written; it is simply about making a political point and doing so rather badly. On that basis, I urge the House to reject amendment (a), and to agree with Lords amendment 9.
Lords amendment 4 agreed to.
Lords amendments 5 to 8 agreed to.
Amendment (a) proposed to Lords amendment 9.—(Gregg McClymont.)
Question accordingly negatived.
Lords amendments 9 to 38 agreed to, with Commonsfinancial privileges waived in respect of Lords amendments 9 to 13, 15 to 23, 27, 29, and 32 to 38.
Ordered, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendment 1;
That Tom Blenkinsop, Gregg McClymont, James Morris, Claire Perry and Steve Webb be members of the Committee;
That Steve Webb be the Chair of the Committee;
That three be the quorum of the Committee.
That the Committee do withdraw immediately.— (Mr Gyimah.)
Committee to withdraw immediately; reasons to be reported and communicated to the Lords.