Clause 202 - Requirement for knowledge and understanding: supplementary

Pensions Bill – in a Public Bill Committee at 3:30 pm on 18th March 2004.

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Question proposed, That the clause stand part of the Bill.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I want to raise a couple of issues on a clause to which the adjective ''delphic'' could reasonably be applied. The first couple of lines are a masterpiece of drafting, and define

''a person's functions as trustee of a relevant scheme or any functions which he has by virtue of being such a trustee''.

That is a perfect circular definition. The clause touches on a point that the Minister referred to when we debated the previous amendment, in that it envisages delegation of investment discretions. We seem to be recognising that some will be more equal than others, as it were. In order to comply with clause 200, some trustees will be expected to have a depth of knowledge—perhaps with a narrower scope—that others will not have. We are already beginning to see a slight definitional problem in relation to whether people comply with the measure.

We have the usual good old subsection that seems so popular with the draftsmen of the Bill, which specifies that everything can be changed at the stroke of a pen by regulation—meaning that any provision may apply to a particular trustee ''in prescribed circumstances''. I deprecate that, but we have debated it in a previous context.

Subsection (3) says that none of the sections

''affects any rule of law requiring a trustee to have knowledge of, or expertise in, any matter.''

Perhaps the Minister could put a little flesh on the bones. What kind of rules of law are we talking about? Clearly, there are the basic trustee Acts. I failed the trusts exam in my first attempt at solicitors finals, so I cannot claim any great expertise. I am sure that the Minister was one of the people who passed on their first attempt. There is basic trustee legislation and a whole raft of legislation on trusts. Is that what he means, or are there some more specific pieces of legislation, besides the 1995 Act, envisaged by subsection (3)?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

It might help if I set out the purposes of clause 202. It adds supplementary provisions to those of clauses 200 and 201 on trustees' knowledge; my speaking note says ''clause 2001''—I know we have a lot of clauses in the Bill, but that would be ridiculous. Clause 202(1) makes it clear that the functions of a trustee include those that may have been delegated to him or her as a member of a sub-committee of trustees. Subsection (2) allows for regulations to disapply or modify those requirements in prescribed circumstances. We intend to use the provision to allow a period of grace for newly appointed trustees to acquire relevant knowledge.

Subsection (3) provides that the provisions do not affect existing law that may require knowledge or expertise from trustees, so that, for example, the provisions supplement rather than replace existing trust and common law provision on the duty of care owed by trustees. Thus these provisions on trustees' knowledge do not affect the knowledge that should, in truth, already be required by the duty of care.

We believe that there are two considerable benefits in the legislation. First, it makes the requirement for appropriate knowledge quite explicit, putting it beyond doubt. Second, it provides the opportunity for the regulator to spell out in a code of practice the sort of knowledge trustees ought to have and how to get it, making trustees' responsibilities clearer. It also enables the regulator to intervene proactively to raise the overall standard of knowledge. I hope that that answers hon. Members' questions.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

The Minister talks about the code of practice setting out what knowledge is required and how to get it. Does that mean that the regulator will set out some appropriate courses and qualifications? I thought that the Minister said the opposite when discussing the previous group of amendments.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

We are concerned that there should be appropriate training opportunities and courses for trustees, and there are already providers of such courses. I believe that the trade union movement has a major role to play, but we have made it clear that while some, although perhaps not the hon. Gentleman, may wish to be examined in the subject and enjoy, in the proper sense of the word, that opportunity—we have heard that the trustees of the

parliamentary fund have volunteered for it—it will not be a requirement to be examined.

Question put and agreed to.

Clause 202 ordered to stand part of the Bill.