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Lord Mackay of Ardbrecknish: My Lords, if the new regulatory regime is to be effective, the authority must be able to impose sanctions upon people found in breach of their statutory obligations introduced by the Bill. My noble friend's amendment seeks to limit the circumstances under which the authority may impose civil penalty fines on trustees of pension schemes.

While I have some sympathy with the intention behind the amendment, I consider that it would be wrong to restrict the ability of the authority to impose civil penalties on trustees in the rigid way that his amendment does. The authority must be able to impose a penalty on a trustee responsible for a breach, even though the trustee may not have committed that breach deliberately, recklessly or negligently. It must be clear that any breach of duty can attract a penalty, so that there is an effective deterrent to wrongdoing. No doubt higher fines will be imposed on a person who has committed a breach deliberately or recklessly; but that does not mean that breaches resulting from other causes—for example, sloppy administration or something of that nature—should not attract a penalty, albeit perhaps at a lower level.

We acknowledge that most trustees do a good job. We do not want to discourage people from taking up trustee posts. Nevertheless, the fact that a penalty can be imposed for any breach of a duty makes it clear to them that they must comply with the responsibility. The authority will have the discretion to decide in every case whether a civil penalty should be imposed, at what level, subject to the maximum, and upon whom. In many cases the authority may decide that a civil penalty is not needed. However, in other cases, circumstances may warrant the imposition of a civil penalty, even though action has been taken to put things right—for example, where the breach was found to be especially severe, was one of a number of similar breaches or it was found to have taken place after there had been a warning by the authority to the trustees.

In fact, we have just discussed a number of amendments introduced by my noble friend Lord Lucas, designed to enable the authority to target its civil penalties appropriately. I hope that my noble friend will agree that they go a long way towards meeting his concerns. For example, they take account of the fact that a trustee board may be a corporate body or a Scottish partnership. In those cases it may be more appropriate for the authority to impose a fine on those individuals whose actions, omissions or neglect resulted in the body or partnership breaching an obligation, rather than on the whole body or partnership.

The amendments will also ensure that those who had no part to play in the wrongdoing and who may indeed have alerted the authority to the breach can be excluded from the punishment where appropriate. For example, in

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the case of a trust board set up as a company, it will not be necessary for every trustee to be held responsible for a breach.

I hope that my noble friend, especially when he looks at the amendments to which we agreed earlier, can see that there are checks and balances to ensure that the authority makes fair and reasonable decisions on the imposition of civil penalties. In the light of my explanation and the amendments moved earlier today by my noble friend Lord Lucas, I hope that my noble friend Lord Buckinghamshire will be able to withdraw his amendment.

The Earl of Buckinghamshire: My Lords, I thank my noble friend the Minister for his full reply. I have to admit that in regard to the points made by the noble Lord, Lord Lucas, I got somewhat lost in the numbers, probably along with other noble Lords. I shall read what he and the Minister said. What he has indicated goes a long way to meeting the concerns raised in my amendment. On that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 18 not moved.]

Lord Lucas moved Amendment No. 19:


Page 4, line 30, at end insert:
("(2A) Where—
(a) apart from this subsection, a penalty under this section is recoverable from a body corporate or Scottish partnership by reason of any act or omission of the body or partnership as a trustee of a trust scheme, and
(b) the act or omission was done with the consent or connivance of, or is attributable to any neglect on the part of, any persons mentioned in subsection (2B),
this section applies to each of those persons who consented to or connived in the act or omission or to whose neglect the act or omission was attributable.
(2B) The persons referred to in subsection (2A) (b)—
(a) in relation to a body corporate, are—
(i) any director, manager, secretary, or other similar officer of the body, or a person purporting to act in any such capacity, and
(ii) where the affairs of a body corporate are managed by its members, any member in connection with his functions of management, and
(b) in relation to a Scottish partnership, are the partners.
(2C) Where the Authority requires any person to pay a penalty by virtue of subsection (2A), they may not also require the body corporate, or Scottish partnership, in question to pay a penalty in respect of the same act or omission.").

The noble Lord said: My Lords, in moving this amendment I shall speak at the same time to Amendments Nos. 215 and 217.

Amendments Nos. 19 and 215 insert additional subsections in Clauses 9 and 135 respectively. They provide for the authority to target the appropriate individual in any civil penalty fines that it may impose. That is similar to the way in which it may target criminal proceedings under Clause 104.

The amendments take account of the fact that a trustee board may be a corporate body or a Scottish partnership. In these cases it may be more appropriate for the authority to impose a fine not on the body or partnership but on those individuals whose actions,

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omission or neglect resulted in a body or partnership breaching an obligation. The individuals who may be so fined are limited. In the case of a corporate body, it would be its directors, manager, secretary, or other similar officer. In the case of a corporate body managed by its members, it would be any member with management functions. In the case of a Scottish partnership, it would be its partners.

The amendments provide that where the authority imposes a fine on an individual it may not impose a fine on the body or partnership in respect of the same breach. The amendments will ensure that those who had no part to play in the wrongdoing, and who may have alerted the authority to the breach, are excluded from punishment. For example, in the case of a trust board set up as a company, it will not be necessary for every trustee to be held responsible for a breach and tarred with the same brush as the wrongdoers.

In view of the references to a Scottish partnership, introduced into Clause 135 by Amendment No. 215, Amendment No. 217 adds a definition of the term to that clause. I beg to move.

On Question, amendment agreed to.

Clause 10 [Powers to wind up schemes]:

Lord Lucas moved Amendment No. 20:


Page 4, line 34, at beginning insert ("Subject to subsection (6)").

The noble Lord said: My Lords, in moving this amendment I shall speak at the same time to Amendments Nos. 22, 23 and 150.

These amendments all relate to public service schemes. The first three relate to powers to wind up such schemes; the fourth concerns powers to modify them. In general, public service schemes will be subject to the same regulatory framework as private sector ones. They will also be subject to similar provisions on winding-up.

While it must be regarded as an action of last resort, it is important that the authority should be able to wind up a public service scheme in a situation where it is not in the interests of the generality of the scheme members that it should continue. In this way, the protection for members of public service pension schemes will be no different than for those of private pension schemes.

Similarly, the new clause after Clause 10 re-enacts Section 143 of the Pension Schemes Act 1993, which provides that the "appropriate authority" can wind up a scheme that is being replaced or is no longer needed where the scheme itself does not have an adequate wind-up power. That may occur, for example, where a new scheme needs to be set up to reflect a restructuring of working practices. Without such a provision, schemes without an adequate wind-up power may have to be maintained where there are no active members or even no members at all. In such situations, where alternative provision can be made for any remaining deferred or pensioner members, it makes administrative sense to allow the "appropriate authority" to wind up the scheme.

Turning to Amendment No. 150, Clause 150 already provides that orders under the Bill can contain such transitional, incidental and supplementary provisions as

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appear necessary to the authority making the order. Amendment No. 150 removes an unnecessary duplication of this provision in Clause 64.

These provisions do not mean that orders amending public service schemes will not be scrutinised. I should like to take this opportunity to reassure the House that it is our intention to make all orders made under this Bill for modification and wind up of public service pension schemes subject to scrutiny by the House by the negative resolution procedure rather than only some of them. This issue was raised by the noble Baroness, Lady Seear, at Committee stage and we agreed to take it away for consideration. I repeat that work is currently underway on suitable amendments to make this clear in the Bill. I beg to move.

5 p.m.

Lord McIntosh of Haringey: My Lords, we have a lot of sympathy with the objectives of this series of amendments. It is certainly right that public sector schemes should be treated appropriately and that there should not be any way of them continuing when they are no longer in anybody's interests.

To some extent the amendments improve the wording introduced at Committee stage. However, to my mind a major problem exists—and I am sorry to see that the noble and learned Lord, Lord Simon of Glaisdale, is not in his place. My noble friend Lady Hollis referred on a previous occasion to the views of the Delegated Powers Scrutiny Committee. That committee did not consider the Henry VIII provisions in relation to these amendments—in particular Amendments Nos. 22 and 23—nor indeed in relation to Clause 10 as presently drafted. In fact, the Henry VIII provisions were not there and the committee therefore could not see them.

When Amendment No. 44 was moved in Committee by the noble Lord, Lord Lucas, he made only the briefest reference to Amendment No. 50, which introduced the bulk of the text of the present Clause 10. Clause 10 reads,


    "An order under this section may be made and complied with ... in spite of any enactment or rule of law ... or without regard to any such enactment, rule of law".

Those are Henry VIII procedures; they enable not only the Secretary of State, but also the occupational pensions authority to change the statute law.

In introducing the amendment, which was grouped with the principal Amendment No. 44, the noble Lord simply said that it mirrored the provisions of the Pension Schemes Act 1993. He did not refer to the fact that it allowed the authority to make changes to the statute law and, to my shame, I did not notice that. I was concentrating on the defects of Amendment No. 44 rather than the defects of Amendment No. 50.

We go further in Amendments Nos. 22 and 23. I did not hear any reference in the Minister's speech to what is now provided in Amendment No. 22, under subsection (6) (b), that,


    "such an order may, as the Authority think appropriate, adapt, amend or repeal any enactment in which the scheme is contained or under which it is made".

Similarly, in Amendment No. 23 subsection (4) states:


    "Such an order may, as that authority think appropriate"—

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interestingly, the wording is slightly different—


    "adapt, amend or repeal any enactment in which the scheme is contained or under which it is made".

I should have thought that the least the Government could do in introducing the power for an authority to change legislation is to give an explanation as to why it is necessary and to recognise that it does not seem to be desirable for these amendments to be introduced in such a way and in such a time that the Delegated Powers Scrutiny Committee could not see them or have an opportunity to comment on them.


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