My Lords, these amendments are those that we indicated, in Committee, that we would lay on Report. They respond to the recommendations of the Delegated Powers and Regulatory Reform Committee. The committee was concerned that Clause 48(3) was too broad. That subsection provides a power to create exemptions to the requirement to check that advice has been received under the advice safeguard. In Committee we explained that, as set out in the consultation response document Freedom and Choice in Pensions, we intended to exempt those with pensions wealth below £30,000 from having to obtain advice. This remains our only intended use of the exemption. However, it may prove necessary, once the new flexibilities come into force, to create an exemption that applies in other circumstances.
Amendment 4 divides the original power, creating a specific power to exempt from the safeguard those who have rights to safeguarded benefits that are worth less than an amount specified in the regulations. This relates to the exemption we intend to make in regulations for those with safeguarded wealth of £30,000 or less. Amendment 6 makes the same change for Northern Ireland. Amendment 14 changes the procedure that applies to regulations made under these powers, so that only regulations that make an exception for those whose safeguarded wealth is below the specified amount are subject to the negative procedure. These regulations will need to be in place by
The final part of Amendment 4 allows the regulations to specify exactly how this £30,000 threshold will be calculated. In response to feedback from stakeholders, we have decided that this should apply only to safeguarded benefits in the scheme from which the member intends to transfer, and be calculated on the basis of the cash equivalent transfer value, which is the standard measure in the industry.
The Delegated Powers and Regulatory Reform Committee was also concerned that Clause 48(7) was too broad. Subsection (7) currently provides a power to give the meaning of the phrase “appropriate independent advice” in regulations. In Committee, we explained that in the response document to the consultation on freedom and choice in pensions, the Government set out that the advice which schemes would have to check had been received would be given by an adviser authorised by the FCA. We also explained that our intention is to define “appropriate independent advice” in regulations by reference to an activity regulated by the FCA, and that in parallel to this Bill the Government will seek to legislate to add a new activity to the FCA’s regulated activity order. This will be done by means of a statutory instrument amending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, which will be subject to the affirmative procedure. The Treasury will lay a draft of this statutory instrument before the end of the month, and ahead of Third Reading.
Amendment 5 draws upon Amendment 44A, tabled in Committee by the noble Lords, Lord Bradley and Lord McAvoy, which suggested that advice should relate to the characteristics of the adviser providing it, as opposed to the nature of the advice itself. The amendment provides that, “appropriate independent advice” must be,
“given by an authorised independent adviser”,
and goes on to set out that this means someone who,
“has permission under … the Financial Services and Markets Act 2000 … to carry on a regulated activity specified in regulations”.
This pertains to the link we intend to draw from regulations between the definition of “authorised independent adviser” and the new regulated activity that the Treasury will seek to legislate to create.
The clause, as amended, retains the power to specify the nature of the advice. This is being done as a precautionary measure to allow the Government to respond to practice emerging after April, which may require aspects of the definition of “appropriate independent advice” to go beyond that which can be expressed purely by the link to the FCA’s regulated activity.
Amendment 7 makes parallel amendments for Northern Ireland. I hope the House will agree that these amendments satisfy our commitment to seek to address the concerns of the Delegated Powers and Regulatory Reform Committee. I beg to move.