Mr. Pond: The hon. Gentleman made some important points, but I feel that he spoiled some of them by over-egging the pudding and suggesting that swathes of trustees would be prohibited or sent on training courses.
We need to put the debate in context. The hon. Gentleman and other hon. Members may be reassured to learn that in 2002–03, OPRA prohibited only 11 trustees. A trustee who is prohibited will have the option of either taking the case to the tribunal or, having taken ameliorative action, asking for the prohibition to be lifted. The question is whether trustees are professional in going about their tasks. We do not in the Bill seek to ensure that all trustees are professional trustees, as the hon. Gentleman suggested, but we would wish all trustees to act in a professional manner. As he acknowledged, trustees have an important responsibility. They are the people who will in large part determine the interest of the members of a pension scheme. We would expect trustees to behave professionally and to undertake those responsibilities seriously, as would the members.
If a trustee is considered to be acting improperly or incompetently, they will face prohibition by the regulator. That must be an option. The reasons why a trustee is acting incompetently may be to do with a lack of understanding about pensions, their responsibilities or the additional skills that they require. All I would say is that we shall discuss the issue later. The hon. Gentleman mentioned the Myners report and the requirement to educate trustees. Since we shall discuss that in some depth when we come to part 5, I suggest that the Committee defer further discussion on the matter until we reach that point.
Mr. Osborne: Of course the Under-Secretary is right that the bigger discussion about the role of voluntary trustees versus professional trustees is best saved for later in the Bill. He mentioned that 12 had been prohibited.
Mr. Pond: Eleven.
Mr. Osborne: Eleven.
Mr. Pond: It may be 12 by now.
Mr. Osborne: It may indeed. That figure is partly because the 1995 Act is tightly drawn and provides for orders against people who have been in ''serious or persistent breach'' of specific parts of pension law. The clause, however, gives a much broader definition of a person against whom such orders may be issued, which is someone who is merely
''not a fit and proper person to be a trustee''.
In his discussions with OPRA and so on, has the Minister made any estimate of whether there will be a large increase in the number prohibited as a result of the clause, or does he expect the figure to remain at less than a dozen a year?
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Mr. Pond: I would not like to put figures on that. We are not expecting that huge numbers of trustees will be deemed unfit to carry out that responsibility. I am sure that the Committee would want to join me in paying tribute to the great majority of trustees who do an excellent job on behalf of the members of those schemes. In our discussions, we in no way want to undermine the commitment or professionalism that most trustees bring to their work.
As the hon. Gentleman indicated, however, some individuals may well be deemed to be neither fit nor proper to have such considerable responsibility for the pension interests of members, because of their activities outside their roles as trustees. In other financial walks of life, trustees may have been considered to have acted improperly. I am sure that the Committee would agree that it is important that the regulator takes that into account.
I do not wish to detain the Committee by talking about the way in which OPRA will identify those circumstances. With your permission, Mr. Griffiths, and that of the Committee, we will write in detail to members of the Committee about the sort of checks that the regulator will carry out. That might give the hon. Gentleman a better idea of the number of people who will be affected.
Question put and agreed to.
Clause 29 ordered to stand part of the Bill.
Mr. Pond: I beg to move amendment No. 29, in
clause 30, page 18, line 40, leave out paragraph (a) and insert—
'(a) after subsection (1)(a) insert—
''(aa) pending consideration being given to the institution of proceedings against him for an offence involving dishonesty or deception,'','.
The Chairman: With this it will be convenient to discuss Government amendments Nos. 30, 94, 96 and 102.
Mr. Pond: As with most of the Government amendments, these are fairly technical amendments to make sure that the Bill is clear and easy to understand. Unless members of the Committee wish to raise particular issues, I suggest that they accept the amendments as an improvement to the Bill.
Amendment agreed to.
Amendment made: No. 30, in
Clause 30, as amended, ordered to stand part of the Bill.
Appointments by Regulator
Mr. Osborne: I beg to move amendment No. 185, in
clause 31, page 19, line 40, leave out—
'(a) by the employer'.
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The Chairman: With this it will be convenient to discuss amendment No. 186, in
Mr. Osborne: These two probing amendments are designed to elicit information from the Government. They deal with the fees and costs of the trustee appointed by the regulator. I am sure that we shall have a broad debate later in our proceedings about where the cost of expert advice should fall and how we should deal with a situation in which professional fees are eating into the resources of a scheme, something that we have all come across.
Under subsection (2), the regulator can decide to charge an employer or a scheme—or both—for the costs of trustees. That is a change from the 1995 Act. Will the Under-Secretary explain the reason for that change? It could mean that considerable direct costs fall either on the scheme or on the employers, who may not be culpable for the problems of the scheme, yet may be required to pay significant costs. In the long run, the cumulative effect of that would be to discourage employers from offering final salary schemes, which we all accept is a trend and a problem. I tabled the amendments so that the Under-Secretary could explain how the expenses and fees of trustees appointed by the regulator will be paid, how the determinations of who should pay will be made and whether the decisions can be appealed against. What check will be made that the trustees are not charging unreasonable fees and that the regulator has not gone for the most expensive City firm to employ the most expensive trustees when they are not necessarily the people who are needed?
Mr. Webb: The amendments raise the important issue of who meets the costs of some of the regulatory burdens. The hon. Member for Tatton said that the employer might not be culpable, as indeed he might not; but he might be. The amendments would remove the power of the regulator to apply any cost, in whole or in part, to the employer. I think that essentially the hon. Gentleman was saying that it should not necessarily always be the employer who pays the whole amount; however, it does not follow that the employer should never pay any of it. For that reason I would not support amendments Nos. 185 and 186.
Mr. Osborne: I did point out that the amendments were probing amendments. Perhaps if the hon. Gentleman were to table some amendments to the Bill, he would know what it is like to table a probing amendment.
Mr. Webb: I assure the Committee that there are plenty in the pipeline.
The hon. Gentleman raised another, serious, issue; I may risk inducing another intervention when I say that I find it slightly startling to find a Conservative Member worrying about the ravages of the free market, and worrying about competition in trustees leading to a fiercely competitive market, where there was minimum cost but where trustees might somehow exploit schemes or employers.
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It is not clear to me, with respect to the clause or the amendments, whether we are dealing with cases in which, for example, a trustee is prohibited or suspended and the regulator replaces him with someone else, or with cases in which a scheme is to be wound up and the regulator appoints an independent trustee to see to that.
That brings me back to the issue to which a satisfactory response was not received on Tuesday: the way in which trustees' costs mount up. A response that was mentioned on the Labour Benches on Tuesday was to nationalise the process. I have on occasion mooted the idea that there should at least be a not-for-profit option for the process of winding up a scheme or of acting as an independent trustee.
Very often, there is not enough money in the funds in question, and it seems immoral that that should be the chance for someone to make a fast buck. If there is a public sector body—the regulator—appointing a trustee, I cannot see why that should be an opportunity for someone to make a profit. The private sector having gone wrong, and the regulator having put in a trustee as a result, it would seem that the state should ensure that the process is properly undergone. The trustees should thus, for example, act on the regulator's behalf—perhaps even as employees of the regulator, although I do not know whether that is consistent with the spirit of the Bill.
Whoever were to pay in such a case—employer or scheme—I should be worried if they had to line the pockets of a trustee who was in it for the money. Once things have gone wrong with a scheme and there is not enough money for the pensioners and the workers anyway, everything possible should be done to minimise the call on the fund. I ask the Minister for reassurances that the regulator would adopt that approach.