Hon. Members will have been waiting anxiously to hear how the sentence that I began before lunch ends. I thank them for their patience. We are discussing amendment No. 188, which would remove the provisions that the regulator can apply under section 423 of the Insolvency Act 1986 only if the valuation of assets needed for such an application is done on a date before the section comes into force.
It may assist hon. Members if I explain that the clause is designed to give the regulator the same standing as an insolvency practitioner to pursue any debt due to a pension scheme by reason of transactions that it suspects were made at an undervalue. In those circumstances, the regulator may apply to the court under section 423. If the regulator can show that the transaction took place at an undervalue for the purpose of putting assets beyond the reach of the pension scheme, or of otherwise prejudicing the interests of the scheme, the court may make orders to restore the position of victims of the transaction. The application to the court can only be made if the pension protection fund, the trustees or managers have actuarial evidence that the fund's assets are less than its liabilities. The clause specifies in detail how that is defined.
As hon. Members will be aware, subsection (7) provides that the clause can apply only when the actuarial valuation is in respect of a date after the commencement of section 423. That is because an actuarial valuation can be made with reference to any date, although if it is made for statutory purpose it will have to be made within one year of that date.
Subsection (7) is designed to ensure that the regulator's powers to pursue a debt in respect of a deficit that arises before the provisions come into force are limited. If the debtor is bankrupt or is a corporate entity that is being wound up, the regulator must have leave of the court to make an application under section 423. An application made under that section is treated as being made on behalf of the victim of the transactions—the trustees, the members of the scheme or the PPF board. That power will enable
the regulator to fulfil its objectives of protecting members' benefits and reducing calls on the PPF.
The main objective is to recover debts owed to the scheme by the sponsoring employer where the employer's assets have been depleted in order to defraud creditors. That provides the regulator with the power, if necessary, to carry out its functions and a mechanism for recovery of funds to creditors.