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Lord Haskel moved Amendment No. 53:


Page 6, line 3, at end insert:
("(c) in the case of any trust scheme, direct that an advertisement prepared by the Authority shall be inserted in national or local newspapers or magazines.").

The noble Lord said: In moving this amendment I wish to speak also to Amendments Nos. 81 and 82. The Minister should be quite pleased with this amendment because it may save the taxpayer some money. It concerns publicising the regulator's decisions. Public knowledge about someone breaking the rules is often a far greater deterrent than the penalties or the fines imposed on a company. This is because that information could reflect on a company's image, its share price and its credit rating and even signal a financial crisis in the business. The Committee may have noticed that the publicity given to fines imposed by FIMBRA has had more deterrent value on firms in the financial services industry than the fines themselves. The purpose of this amendment is to add the threat of publicity to the penalties which can be imposed on an employer. That would be quite normal in the commercial world. I beg to move.

9.30 p.m.

Lord Mackay of Ardbrecknish: I cannot agree with the noble Lord that the amendments would save me, or more importantly the levy payers, money.

Turning to Amendment No. 53, Clause 93 of the Bill already provides the authority with the power to publish reports of its investigations in any manner it thinks fit. That would include the placing of advertisements in local or national newspapers or magazines if it believes that that is appropriate. Therefore, I believe that Amendment No. 53 is not necessary.

As regards requiring the authority to publish reports of all investigations as Amendments Nos. 81 and 82 suggest, many investigations may conclude that there are no substantial problems with the scheme. It would be pretty bureaucratic and costly to require the authority to publish reports in those circumstances. Other investigations will reveal problems which are of concern only to the members of that scheme and which can be put right relatively easily. The authority has power under Clause 13 to direct the trustees of that scheme to advise scheme members of the conclusions of the authority's investigations.

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Therefore, I believe that the amendments are unnecessary. In cases where the authority feels that publicity for its reports and decisions is necessary, powers already exist for the authority to do just that.

Lord Haskel: I feel that the matter should be pressed harder rather than merely being left to the discretion of the regulatory authority. However, at this time of the evening I do not intend to press it. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Clause 86 [Review of decisions]:

Baroness Hollis of Heigham moved Amendment No. 54:


Page 49, line 29, at end insert:
("( ) to make any other action or to make any other determination under this Act.").

The noble Baroness said: In moving Amendment No. 54 I shall speak also to Amendments Nos. 55 and 58. The amendments seek to establish a right of appeal against the decisions of the authority.

Amendment No. 54 widens the scope of reviews by the authority of its own decisions in order to make any decision reviewable on the application of any person. Amendment No. 55 would require that the authority must, on the application of any person appearing to the authority to be interested in the decision, review a determination if it appears that there has been a material change of circumstances, material facts were missing or it was wrong on a question of law. At present that review is merely optional. Amendment No. 58 allows any person aggrieved by a determination given on a review by the authority, or its refusal to review a determination, to appeal to the court rather than merely on questions of law. Together the three amendments provide that the authority will make a decision on a matter, and it must review that decision if requested to do so or if it did not get the facts or the law right. If a person is still not satisfied, that person can appeal to the courts on questions of fact or law.

We do not suggest necessarily that the drafting of the amendments is perfect, but we ask the Government to look again at whether the authority should be the final arbiter in cases of fact. We ask either that questions of fact should also be appealable to the court, as proposed in the amendments, or, alternatively, that the Government consider establishing an appeal tribunal rather like the Financial Services Tribunal which can hear appeals for the Securities and Investments Board on issues such as withdrawal or suspension of authorisations to conduct investment business.

While the suspension of a trustee is not a question of a loss of livelihood, it can still have serious consequences. We do not believe that it is sufficient to say that a mistake of fact can be rectified by the authority under Clause 86(3) (a) when a review is optional and it is up to the authority itself to decide whether there has been a mistake as to material fact. We hope that the situation will not arise often. However, we believe that natural justice requires that there should be

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an appeal from the authority on matters of fact as well as of law analogous to that established in the Financial Services Act. I beg to move.

Lord Mackay of Ardbrecknish: We are moving to another part of the Bill relating to the functions of OPRA. I believe that we are all agreed on one matter: that we want OPRA to be an effective regulator. I rather fear that, taken together, the amendments could easily have the reverse effect. They require the authority to review any of its actions. That involves every request for information, every attempt to carry out an investigation, and every application for an injunction. Indeed, those provisions would frustrate and delay the very regulatory process that we seek to put in place. Adding a right of appeal to the courts on questions of fact as well as of law could only add significantly to the delays.

There may be times when OPRA has to take very difficult decisions—for example, when the only way to prevent further deterioration in the funding and running of a scheme is to wind it up. That would at least prevent a bad situation from getting worse, and ensure that members received at least some of their accrued rights. I can assure the Committee that those are not the type of decisions that OPRA will take hastily or lightly. They will come only at the end of a period of considerable involvement with the scheme. But, once having been taken, such decisions will need to be implemented as quickly as possible. To require OPRA to suspend such enforcement action pending the carrying out of a formal review would not be in the interests of scheme members.

That would also be the case if every decision taken by OPRA could be taken to the courts, not just on a point of law, but on a point of fact. Perhaps I may suggest to the Committee that this is not a recipe for effective regulation of scheme security.

I understand the desire to have a mechanism for looking again at OPRA's decisions, in particular where penalties are involved. That is why we have put in place a rigorous internal review procedure. Decisions on penalties and on other significant enforcement decisions will not be taken by faceless officials blindly following procedures. They will be taken by the OPRA board. That board will be selected to bring to the authority as wide a range of expertise and knowledge of pensions matters as possible. Decisions will have to be explained, in writing, to those who are the subject of those decisions. The Bill already contains a requirement for OPRA to review its decisions: a mandatory requirement, on application by any person, where penalties are to be imposed and a permissive one where other decisions have been taken.

We accept that there will be a need to ensure that OPRA's decisions have been taken in accordance with the law. That is why we have provided for a right of appeal to the courts—but only on a point of law, where it is obviously the case that the courts are best placed to make judgments.

7 Feb 1995 : Column 198

I believe that the amendments would seriously compromise the authority's ability to do its job speedily and effectively. Having listened to what I have said, I hope that the noble Baroness will feel able to withdraw her amendment.

Baroness Hollis of Heigham: I thank the noble Lord for that reply. Obviously on this side of the Committee we are anxious to do nothing which adds to frustrations and delays regarding the regulatory authority. We accept the Minister's worries about that; we certainly do not wish to contribute to them. However, the Minister might perhaps have accepted more freely than he did that, as drafted, the authority's powers are extremely draconian. The authority is the final arbiter on matters of fact, and almost the final arbiter on matters of law. There is an area here of legitimate public concern. Unless we do something about that, only the right of judicial review will be open to aggrieved applicants, and for that they will not be able to obtain legal aid.

Obviously at this stage it is a probing amendment. Will the Minister review the situation? In the case of most other agencies, such as under the Financial Services Act 1986 and with the child support appeals tribunal and the Industrial Injuries Compensation Board, I understand that there is a route of appeal. It seems to me that between us we ought to be able to find a last safety net for aggrieved individuals who have been harshly treated with draconian measures by the authority. Perhaps the Minister will consider that. It is rare not to have the right of appeal with such a significant authority. I accept that we do not want delays, but we need something on grounds of natural justice. I invite the Minister to make a final comment.


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