We are covering a wide range of issues today. The clause deals with prohibition and suspension orders for corporate trustees.
Clearly, the role of trustees is important—I am sure that the shadow Minister takes a similar view—and we want good, trustworthy and honest people to be pension fund trustees. We already have the ability to prohibit individuals from being pension fund trustees if they prove dishonest or the like, but there is a bit of a loophole in this area: an individual who has been banned can turn themselves into a company and, as a corporate trustee, is not banned any more. That seems rather absurd. The clause provides that, if a corporate trustee employs someone who is disqualified, that corporate trustee can no longer act as trustee unless it ceases to employ the person who has been disqualified.
To run through the clause slightly more precisely, it prohibits a company from being a corporate trustee if one or more of its directors has been prohibited by the Pensions Regulator. There are not vast numbers of people who have been prohibited, but there are enough for us to want to make sure that there is no abuse of the provisions on trustees. Under the clause, the prohibition on the company is immediately removed if the director who has been prohibited from being an individual trustee leaves the company board. In addition, the company is allowed to apply to the Pensions Regulator for the prohibition to be waived. Clauses 43 and 44 correct an anomaly, whereby under the Pensions Act 1995 an individual trustee can be suspended,
“pending consideration being given to the institution of proceedings against him for an offence involving dishonesty or deception” whereas corporate trustees cannot.
The key point is that this measure closes a loophole in the current prohibition regime which could be exploited by those not fit and proper to be trustees to continue to act in this capacity through a company directorship, and thus potentially have control over significant occupational scheme assets. Many of us are concerned about the risk of fraud in pension schemes. There are very large amounts of other people’s money around. Therefore we believe that it is right to close a possible loophole for those seeking to circumvent the legislative framework or defraud pension schemes. If an individual is prohibited, that status should continue to apply if they become a corporate trustee. On that basis, I commend the clause to the Committee.