These are technical amendments to ensure that the correct sections of the Pensions Act 1995 are referred to in each case. Schedule 2 sets out the reserved regulatory functions, the exercise of which is reserved exclusively to the determinations panel. As drafted, the schedule does not refer to the correct subsections in respect of the power to which it relates. These amendments correct those drafting errors.
I shall not detain the Committee by pulling up the Under-Secretary on drafting and technical amendments, but grouped among those is Government new clause 3. That is assuming that I am discussing the right group—[Hon. Members: ''That is later on.''] I apologise; I thought that there were plusses on the end of each line.
Amendment agreed to.
Amendment made: No. 78, in
schedule 2, page 174, line 27, leave out '4' and insert '4(1)'.—[Mr. Pond.]
I beg to move amendment No. 79, in
schedule 2, page 174, line 27, at end insert—
'The power to make an order under section 4(2) extending the period for which an order under section 4(1) of that Act has effect.'.
Amendment No. 79 ensures that the power to extend the period for which a trustee is suspended in cases where criminal proceedings have not yet been instituted rests solely with the determinations panel. That will ensure that when the regulator proposes to extend a period of suspension it must send a warning notice to those directly affected. Their representations will be considered by the determinations panel. There will also be a right to make a reference to the pensions regulator tribunal.
Amendments Nos. 81 and 83 are necessary to ensure that only the determinations panel may exercise the power contained in sections 9 and 32 of the Pensions Act 1995 to vest or transfer properties consequential to the appointment or removal of the trustee. That power may be exercised when, for example, a trustee is appointed to a scheme that previously had no trustees. It might be that some of the scheme's assets are held in the name of a past trustee. The power allows the regulator to transfer such property to the appointed trustee.
As the power is only exercisable by the determinations panel, directly affected parties will be able to make a reference to the pensions regulator tribunal.
Amendment agreed to.
Amendments made: No. 80, in
schedule 2, page 174, line 28, leave out 'such an order' and insert
'an order under section 4(1) of that Act suspending a trustee'.
No. 81, in
schedule 2, page 174, line 33, at end insert—
'The power under section 9 to exercise by order the same jurisdiction and powers as the High Court or the Court of Session for vesting property in, or transferring property to, trustees in consequence of the appointment or removal of a trustee.'.
No. 83, in
schedule 2, page 175, line 2, at end insert—
'The power under section 30(2) to exercise by order the same jurisdiction and powers as the High Court or the Court of Session for vesting property in, or transferring property to, the trustees where a trustee becomes disqualified under section 29 of that Act'.
No. 82, in
schedule 2, page 175, line 9, after 'power', insert 'by direction'.—[Mr. Pond.]
I beg to move amendment No. 84, in
schedule 2, page 175, line 23, at end insert—
'The power under section [Reports by skilled persons] to issue a notice requiring a report to be provided to the Regulator.'.
The new clause will give the regulator the power to obtain expert opinion and analysis to assist it to exercise its functions. It will be used to inform the regulator in the exercise of its functions in a particular case. For example, if the trustee and employer are unable to agree the schedule of contributions since the
employer contends it cannot make the payments, the regulator might require a report on the strength of the employer's business and ability to sustain the funding of the scheme. That would enable the regulator to determine what schedule of contributions was appropriate, and work with the employer and trustee to improve the funding situation. That is an important power to enable the regulator to allow it to act to protect members' interests.
Amendments Nos. 34 and 84 are necessary to give effect to new clause 3. A person who is required under subsection (9) of the new clause to co-operate with the person making the report will be able to disclose appropriate information to that person, even if it is classified as restricted information. The power to require a report will be reserved to the determinations panel. That ensures that those affected by the decision will have the chance to comment before the decision is made and, if they so wish, to refer the decision to the tribunal.
I am beginning to warm to recurring themes, and there are two prompted by new clause 3.
First, new clause 3 comes within the scope of schedule 2, which relates to the determinations panel. That panel is able to commission experts, who are presumably highly paid pension experts although they are not expert enough for this sort of thing. Those experts therefore pay somebody else to do expert work for them. We are talking about the determinations panel, which is independent of the regulator—it is not paid by the regulator, but out of the levy, which I suppose means that it is paid by the Department, although I am slightly hazy on that. Can panel members show the contents of the expert report to the people to the other side of the Chinese wall? Perhaps they cannot. If the regulator needs an expert opinion, there should be another new clause—perhaps the Government have yet to table one—which relates to the fact that the regulator will be able to commission expert advice. Alternatively, perhaps the regulator is an expert so it does not need to commission expert advice.
People will start to say, ''Come on, what's going on here?'' There are different bits of different organisations. Provisions apply to one bit, but not to the other bits. People can tell others about one bit, but not others. Things are becoming tortuous, and one wonders whether the new clause is designed to facilitate the smooth running of the regulator. I do not necessarily object to the regulator asking for expert reports, although I am surprised that we need an Act of Parliament to enable it to do that—I do not see why, if the regulator does not know the answer to something, it cannot ask someone and pay them for their advice. If we need a new clause, I do not understand why it has to be to schedule 2, which refers to the bit the other side of the wall. Why cannot the whole regulator benefit? I am concerned about the determinations panel and this artificial subdivision.
There is another issue, relating to the dreaded pension protection fund, which we have not yet reached. The example that the Under-Secretary gave when speaking to the new clause was that the Government might need to work out the state of
play of an industry and the viability of the company—which is, presumably, meat and drink to the pension protection fund. The fund will want to know whether a particular industry will have lots of people going to the wall and making claims on the PPF. Will it also be conducting expert research into the state of the steel industry or airline industry or whatever? Will the determinations panel be allowed to tell the PPF the contents of the report? Will it be required to? Will three different sets of people end up commissioning the same single expert because none of them are allowed to talk to one another?
I sense a lot of overlap between different bits of the system. I began as an enthusiast for this regulator, but within three hours my enthusiasm has waned. I hope that the Under-Secretary can reassure us on the points that I have raised.
We are a little more consistent than the Liberal Democrats, so our enthusiasm for the regulator is not waning after just three hours of discussion. However, we have concerns about new clause 3 and the fact that it has been tabled at a late stage, and I agree with the hon. Member for Northavon about the confusion that that might give rise to. The Minister needs to clarify why he feels that the new clause is required.
I suggest that the Government needed the new clause to achieve their objective because there are elements of compulsion in clause 52, which require people to pay for the expert advice. They probably needed a legal basis on which to do that. However, later we shall debate many other clauses that require employers, trustees or other people to provide information to the regulator. Why is the additional requirement necessary? I did not feel that the Minister properly explained that.
Would it be entirely within the discretion of the trustee, the employer or anybody issued with a notice to employ any expert advice that they wanted, or would the regulator have to agree who that skilled person would be? As I read the clause—I may be wrong about this—the person issued with the notice could choose the person from whom to commission a report, and would not have to seek the regulator's approval. What would happen if the regulator said that that person's advice was not expert, or that it would not have liked that person to compile the report?
On my reading of the clause, there seems to be an element of compulsion. Under subsection (2),
''A report notice must require the person appointed to make the report to be a person''
and it then sets out who such a person would be. There is obviously an element of compulsion there. However, subsection (9) compels anyone else
''who is providing (or who at any time has provided) services to the notified person in relation to a matter on which the report is required''
''give the person appointed to make the report such assistance as he may reasonably require.''
That is a very wide-ranging power: under the new clause, all people who have provided advice to a
company may be required to provide certain sorts of information.
I pick up the point made by the hon. Member for Northavon: that information goes to the determinations panel. The same company may be in the process of being crawled over by the regulator, which may ask it for almost identical information. Not only will that make it more difficult for the company or trustees involved, but it will add to the cost. In many cases, the costs may ultimately be borne by pension scheme members.
There is plenty of scope for duplication, as the hon. Member for Northavon has pointed out. Before we allow the new clause to be added to the Bill, it would be good to hear from the Under-Secretary about why he thinks it so necessary.
Some important issues have been raised. Let me clarify. We did not seek these powers because we thought that it would be a good wheeze to have the expert reports carried out, or to insist that they were paid for. The purpose of the new clause emerged from the experience of OPRA itself. It found a weakness in its ability to carry out its regulatory powers effectively. Although there might have been a wealth of legal, pension and actuarial expertise readily available and on tap, there was not necessarily the sort of expertise necessary to make a judgment about the viability of a particular employer or the sector in which it operated, or about the ability of that employer to make the payments that the determinations panel might require.
I must also clarify that the determinations panel would exercise its functions on behalf of the regulator. In the circumstances that we are discussing, the regulator would tell those involved that it proposed to ask for a report, and whom it intended to pay for it. The determinations panel would decide how that would be implemented, to be fair and impartial. The regulator would direct who would prepare the report; subsection (2) makes it clear that that person would be nominated or approved by the regulator.
There is an issue about the exchange of information, to which the hon. Member for Northavon referred. We must be clear that the regulator requires that. There is a legal requirement to co-operate in the introduction of reports and enable the regulator to direct that the third party pays for the report. The hon. Member for Tatton (Mr. Osborne) was spot-on in his assumption about why we need legislation to make those powers available to the regulator. To answer the hon. Member for Northavon, the regulator will have the power to disclose the contents of the reports to the PPF when necessary.
I hope that hon. Members will recognise that although we will be considering a substantial piece of proposed legislation during the next few weeks, we are not adding to it for the sake of doing so. These are necessary powers that the regulator and a determinations panel will require in order to do the job that my hon. Friend the Minister of State said was necessary to provide for people the confidence and
protection in the operation of these types of pension scheme.
Amendment agreed to.
Schedule 2, as amended, agreed to.