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Lord Haskel: I thank the Minister for that comprehensive reply. However, I could not absorb all the data that he gave. There is one point I should like to clarify. Schedule 3 is much narrower than the table. Can we have an assurance that there will be a two-way flow of information with all these bodies? In order to have more effective regulation we need to have a two-way flow of information between the bodies. Perhaps the Minister will give some thought to that. Meanwhile, we shall have to read what is in Hansard. Does the Minister wish to intervene?

Lord Mackay of Ardbrecknish: I am certain that the two-way flow is allowed for and that the problem with which the noble Lord is concerned does not arise. Of course I shall check that as well as the other points. But I think that he can be assured that the two-way flow is allowed for.

Lord Haskel: I thank the Minister for that, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Monkswell moved Amendment No. 24:

Page 2, line 35, at end insert:
("( ) Before making such provision as is mentioned in subsection (5) above the Authority shall consult the other trustees of the trust scheme and the employer and shall consider any representations made by them.").

The noble Lord said: I hope that we can have a two-way flow in respect of Amendment No. 24. It relates to Clause 3(5), which confers on the authority the powers to suspend a trustee of a trust scheme. The amendment seeks to ensure that before suspending a trustee the authority shall consult the other trustees and the employer.

The operation of pension funds through boards of trustees is a collective activity. It is in the trustees' interests to know what is going on so that they can take decisions affecting the members of the scheme. Furthermore, if the authority informs the trustees that one of their number is likely to be suspended, an explanation might be given for the collective action of the trustees that is in question.

7 Feb 1995 : Column 165

Another factor is the effect of any attendant publicity on the operation of this scheme. We must bear in mind that some of the pension funds are major players on the stockmarket. The calling into question of the performance of a particular scheme, which would be implicit in the suspension of one of the trustees, could have ramifications that need to be considered.

There may also be an effect on the employer. If something hits the employer out of the blue—for example, in terms of publicity—the confidence of the market in the operations of that company may be tested. It is right that the employer should have some forewarning and he may be able to give an explanation of the circumstances which suggest that the trustee should be suspended. The employer should have some warning of the storm that is likely to hit him and he should be able to take precautions in defending the continuing operations of the company. I beg to move.

Baroness Hollis of Heigham: I support the amendment moved so clearly by my noble friend. I do so on the simple ground that it relates to natural justice. If OPRA makes a mistake about the reputation of a trustee—and we hope that it will not happen often—it is right that OPRA should use its best endeavours to restore that reputation. Basically, that is what the amendment would do and I hope that the Government will accept it.

The Earl of Buckinghamshire: I support the amendment moved by the noble Lord, Lord Monkswell. The balance of power on the board of trustees is most important, as is the relationship between the trustees and the employer. It is sensible that where OPRA makes a change of trustee consultation should take place.

The noble Lord, Lord Monkswell, made most of the points that I wished to make. OPRA does not need to take into account the views of the other interested parties but a dialogue must take place, and that is an extremely important point. I look forward to hearing the Minister's reply.

6.45 p.m.

Lord Mackay of Ardbrecknish: This is a difficult issue but a balance must be struck—that is the first time today that I have used the phrase. As the noble Baroness said in her intervention, one must expect some natural justice for the trustee who is being removed. However, all Members of the Committee will agree that the authority, if it believes that something has gone wrong, must be able to act quickly in order to protect the interests of scheme members.

The Bill provides a number of safeguards for trustees and for schemes under investigation. For example, OPRA will need to give at least one month's notice of its intention to remove a trustee. A trustee can make representations and ask OPRA to review its decision. The remaining trustees and other persons may also make representations to OPRA, and OPRA will be free to consider all the circumstances. That is right and proper but we must not strain OPRA's ability to act quickly. If it does not do so a great deal of damage may be done. It is important to balance the interests of the scheme

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members, whom the regulatory authority is there to protect, with the natural justice and the rights of a trustee.

I like to think that the Bill strikes that balance. I hope that the noble Baroness, Lady Hollis, who rightly drew the matter to my attention, will accept that it does strike the right balance between the ability of the regulator to act quickly and the need for natural justice as regards the trustee.

Lord Monkswell: I thank the Minister for his response and I totally accept the argument for precipitate action to be taken in appropriate circumstances. One of the difficulties with which we are faced is the effect of precipitate action on the rest of the trustees and the operation of the scheme, and a possible knock-on effect on the employer. I suspect that we do not yet have the balance right but I accept that we must recognise the need for precipitate action. However, I am not sure how we can deal with that because a problem exists. On the basis of the Minister's reply, and the possible need to return to the matter at a later stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Monkswell moved Amendment No. 25:

Page 2, line 35, at end insert:
("( ) Where—
(a) an order suspending any person under this section is revoked or his suspension is not extended after it has expired, and
(b) no order has been made under this section removing him as trustee,
then he may require the Authority to issue, within the prescribed period and in the prescribed form, a statement regarding their decision or revoke or, as the case may be, not to extend his suspension.").

The noble Lord said: We must recognise the effect of suspension on the individual trustee. One of the difficulties with which we are faced is the implication that OPRA's only activity is to take action when there has been some wrongdoing.

It is unfortunate that the Minister was not more sympathetic to Amendment No. 7, which gave OPRA the responsibility to monitor. That would have made it easier for suspended trustees to believe that they were unlikely to be pilloried. In the process of monitoring a scheme, OPRA may believe that a certain aspect needs further clarification and decide to suspend a trustee. Having made those further investigations the suspension may be lifted. Unfortunately, in view of the way in which the Government propose that OPRA will work, we are faced with the situation in which it will intervene only when there has been some wrongdoing.

Implicit in that is that any action that it takes is dealing with wrongdoing, not just with monitoring or inspecting or seeking to investigate. That is the problem we are faced with. The amendment seeks to ensure that in the case of a trustee who has been suspended and who has effectively been exonerated in that no further action is being taken against him—the suspension having finished—some public statement should be made by OPRA to that effect so that the individual trustee has

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a clean bill of health and there is no stain on his or her character. It is in the interests of that natural justice that I beg to move.

Baroness Hollis of Heigham: Again I wish to support my noble friend on this amendment. I think it is fairly straightforward. We would expect the regulatory authority to consult but we want to make what at the moment could remain merely a matter of courtesy into an obligation. We believe that that is sensible and support it.

The Earl of Buckinghamshire: I support this amendment moved by the noble Lord, Lord Monkswell. I hope I am supporting the correct amendment this time. The whole objective of the amendment is to seek some mechanism to ensure that those people who are wrongly accused are properly vindicated to an extent over and above what is laid down in the Bill. OPRA is given wide powers to suspend trustees. I am afraid that in the normal course of events it may well make mistakes. I hope that that will not be the case, but it is a possibility. We should remember the cause and effect of all these matters. The cause is serious but the impact on the professional trustee, or the individual trustee, who is suspended can be very damaging to his professional life and also on a personal level. It is extremely important that a person is damaged as little as possible by an unfounded suspension. There are significant penalties in the Bill for trustees. It would be wrong for them not to have some recourse when they are incorrectly or improperly—whatever the correct word is—suspended. I look forward to hearing what my noble friend the Minister has to say.

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