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Lord Mackay of Ardbrecknish: This amendment, as has been explained, relates to the authority's powers to suspend trustees. The security of pension rights depends crucially upon the integrity and diligence of the trustees. If they put that security at risk by failing to comply with their statutory duties there must be a power to suspend them from office. I listened to the arguments of the noble Lord, Lord Monkswell, of my noble friend Lord Buckinghamshire and of the noble Baroness, Lady Hollis. However, I do not believe that Amendment No. 25 is needed. I believe that as soon as the authority has concluded its investigations it will seek to ensure that any problems discovered are put right so that the scheme can run without further attention from the authority. We do not want to involve the authority in unnecessary bureaucracy. However, I recognise the argument that trustees who have been suspended should be kept informed of any developments on their case. Rather than ask the Committee to reject the amendment I would say to the noble Lord that if he wishes to withdraw it I shall certainly take away the proposal and consider further the points that have been made.

Lord Monkswell: I thank the Minister for the fairly encouraging response that he will take the amendment away and have another look at it. I re-emphasise that we are not seeking to interfere with the powers of OPRA to suspend anyone. We recognise that that may be necessary in certain cases. But if, following the

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investigation and the suspension, no wrongdoing is found, we think it only reasonable that a trustee who may have been suspended pending the results of the investigation should have his good name cleared. It seems of little import to us that OPRA, having concluded the suspension of a trustee, should issue a statement saying effectively that the matter has been investigated, that no wrongdoing has been found and that the individual is completely exonerated of any stain on his character. Our amendment would seem to be perfectly reasonable. The risk is that if the amendment, or something like it, is not written on the face of the Bill, there will be great concern as to the effect of the way that OPRA will operate on the character and future well-being of individuals in the occupational pensions industry, particularly trustees. It is unfortunate and a possible bar on some able people coming forward and being prepared to be good trustees if they feel that something could happen which would ruin their professional future. However, I note what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3, as amended, agreed to.

Clause 4 [Removal of trustees: notices]:

Lord Lucas moved Amendment No. 26:


Page 3, line 3, after first ("the") insert ("other").

The noble Lord said: This is a technical amendment which clarifies who should be given notice under Clause 4(3) of the authority's intention to remove a trustee. The authority is already obliged by subsection (1) to give notice to the trustee it proposes to remove. The amendment ensures that OPRA has to give notice under Clause 4(3) to each of the other trustees of the scheme. I beg to move.

On Question, amendment agreed to.

Clause 4, as amended, agreed to.

Clause 5 [Removal or suspension of trustees: consequences]:

Baroness Dean of Thornton-le-Fylde moved Amendment No. 27:


Page 3, line 9, after ("3") insert ("or by an order made (whether before or after the coming into force of this subsection) by the High Court or the Court of Session on the grounds of misconduct or mismanagement in the administration of the scheme for which he was responsible or to which he was privy, or which he by his conduct contributed to or facilitated").

The noble Baroness said: The Minister in another place said in introducing the White Paper on 23rd June last year that the role of trustees in pension funds was crucial. I agree with that statement. The Goode Report also stated:


    "Trustees play a pivotal role in the administration of pension schemes".

However, surprisingly, it then took the view that it would not suggest an amendment to trust law. I assure the Committee that I do not intend to start to debate trust law this evening. But it is central to certain aspects of the Bill relating to trustees. It is important, if trust law is to stand as it is, that we have the correct checks and balances in the Bill and that the trustees are clearly

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aware not only of their duties and rights but also of the consequences of breaches of trust law and their responsibilities to the pension fund.

This is not a new idea. Indeed the Wilson Committee in 1980—under Sir Harold Wilson as he then was—reviewing the functioning of financial institutions, said:


    "The framework within which occupational pension schemes in the United Kingdom operate has grown piecemeal and now needs to be systemised and strengthened. It is unsatisfactory in our view that so much of it should depend on a body of trust law developed for quite other purposes".

The Occupational Pensions Board has also drawn attention to that factor in several reports. It said in its 1982 report:


    "We are agreed that the present Trust Law does not provide satisfactory safeguards for members' rights,"

and expectations in occupational pension schemes. That underlines the necessity within the Bill to be absolutely clear on the responsibilities of trustees and the consequences if they are in breach of pension fund rules and trust law. What does the amendment suggest? Clause 3 provides for disqualification of a trustee by the authority. Clause 5, which is now before the Committee, provides that legal action can be taken where a trustee continues to act after having been suspended. The amendment would have the effect of including in Clause 5 instances where a trustee is subject to a court order—and one has to bear in mind that suspension of trustees will not only derive from the authority but there will still be the right for individual members of schemes to go to law—on the grounds of misconduct or mismanagement in the administration of a scheme.

I suggest that the amendment helps to make it plain to trustees what can happen. It also supports the authority in carrying out its responsibility. I beg to move.

7 p.m.

Lord Mackay of Ardbrecknish: First, I should like to welcome the noble Baroness, Lady Dean, to the Front Bench. Although we have heard her speak on the Bill from the Back Benches, this is the first time she has moved an amendment. I am happy to tell her that I think it is unnecessary.

Baroness Hollis of Heigham: Accept it!

Lord Mackay of Ardbrecknish: There is no point in unnecessary legislation. That is not a good thing.

While the noble Baroness was speaking I read Clause 5. Even bearing in mind the lectures I received at the beginning of the Sitting about making matters clear on the face of the Bill, it would be a very stupid person who read Clause 5 without seeing that he (or she) was in for some very real trouble if he continued to act as a trustee. The offence and the penalties are clear.

If someone is removed from a trust board by a court order but continues to act in contravention of that order, the law already provides suitable measures by which the court can enforce compliance. I do not believe that there is any need to provide an alternative or duplicate provision for the authority to take similar court action. The power already exists.

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I hope that, with that assurance that her amendment is unnecessary and the power is already available, the noble Baroness will be able to withdraw her amendment.

Baroness Dean of Thornton-le-Fylde: I am obliged to the Minister for trying to be so helpful. We also were trying to be helpful with our amendment in making the proposals quite clear. Clause 5 as it stands provides that if a trustee continues to act and the matter has been to court the individuals concerned would need to return to the court. We propose that the authority should be able to bypass that procedure and step in.

Nevertheless, I hear what the Minister says. I shall read the record with interest. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 28:


Page 3, line 22, at end insert:
("( ) Proceedings under this section may only be commenced if, having been given every opportunity to correct the matter, the person concerned has failed to do so.").

The noble Baroness said: In moving Amendment No. 28, I shall speak also to Amendments Nos. 35, 36, 38 to 41 and 43, which have been grouped together.

The amendments are all concerned with penalties. I say at the outset that we have no objection to penalties being imposed where there has been wrongdoing or malpractice. However, there has been criticism from some quarters concerned with pension provision that the penalties envisaged in the Bill are so draconian that there may well be difficulty in getting individuals to put themselves forward to stand as trustees at all. Furthermore, unless the Bill is amended in ways which we suggest, a potential trustee might see himself (or herself) as moving into the employer's sights—as he obviously would if he became a trustee—without any protection against victimisation on the one hand (although I say in passing that we shall move amendments later to try to deal with that problem) and on the other hand exposed to severe penalties in the event of failure to undertake or perform the prescribed duties and to take care of members' interests as expressed in the Bill.

I said earlier that we have no objection to penalties being imposed for wrongdoing, but we believe that it has to be conscious wrongdoing and that the individual should be given the opportunity to put things right before the penalties are enacted. The amendment therefore directs itself to the requirement that the person concerned must be given every opportunity to put matters right before proceedings are commenced. Amendment No. 43 to Clause 9 stipulates that the individual concerned must have been involved in deliberate wrongdoing or given a reasonable opportunity to correct a matter in which he or she has been negligent.

Surely these proposals are entirely reasonable. It is very necessary that suitable people come forward to act as member trustees in particular, although these strictures would also apply to other trustees. However, we are particularly concerned about member trustees.

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I am sure that every effort will be made to ensure that trustees are properly trained. Again, we shall deal with those requirements at a later stage in the Bill. But at this stage let us at least demonstrate to those interested that the requirements in the Bill will not be such that trustees can stumble into trouble without knowing and then find themselves facing penalties or fines which they may well not be able to afford.

The other amendments in the group are concerned with trying to spell out with some degree of clarity what happens if a person does not pay the penalty which has been levied upon him or her. We believe that there is a need to set that out with some degree of clarity and we hope that the amendments do so.

I hope that the Minister will find the amendments entirely reasonable. They are meant to be helpful. They are intended to produce legislation which will result in people coming forward to do the jobs which are necessary under the Bill as trustees without being put off by worries about whether they will be able to meet the conditions involved. I beg to move.


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