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Baroness Hollis of Heigham: I am not particularly persuaded by a number of those arguments, but obviously we shall want to consider them. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 20 agreed to.

Clause 21 agreed to.

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Clause 22 [Trustee not to be auditor or actuary of the scheme]:

[Amendment No. 118F not moved.]

Clause 22 agreed to.

Clause 23 [Section 22: consequences]:

[Amendments Nos. 118G to 118K not moved.]

Clause 23 agreed to.

Clause 24 agreed to.

Clause 25 [Persons disqualified: consequences]:

Lord Haskel moved Amendment No. 118L:

Page 13, line 39, after ("scheme") insert ("or a trustee, a member of a scheme or an independent recognised trade union").

The noble Lord said: This amendment deals with the register of disqualified trustees. It is important to have a register, but why is it available only to people connected with the administration of the scheme? Surely it should be a matter of public record. However, the amendment does not go as far as that, but suggests that the register should be available to other trustees, members of schemes or to their trade unions or advisers. It is another small attempt to make the work of the regulator more open and accountable. I beg to move.

Lord Mackay of Ardbrecknish: The amendment provides that the authority must, if requested to do so by a trustee, a member of a scheme or an independent recognised trade union, disclose whether the name of the person specified in the request is included on the authority's register of persons disqualified under Clause 24(3).

I am pleased to be able to say that we are at one on this. We intend that anyone who has concerns about a particular person who is either already acting as a trustee of an occupational pension scheme, or is under consideration for appointment as such, can contact the authority to check whether the authority's register shows the person in question to be disqualified in respect of a particular scheme.

We had hoped that subsection (7) would allow any person who has an interest in a scheme to ask the authority such a question and require the authority to provide an answer. That would cover trustees, scheme members and independent trade union officials. The subsection has been drafted to ensure that the authority is required to state only whether a person named by an inquirer is disqualified in respect of a particular scheme named by the inquirer. This is because some people may be disqualified in respect of a particular class or group of schemes only, and because there is a need to protect those listed in the register from having the information held on them being used for purposes that have nothing to do with whether or not they should act as the trustee of a particular scheme. That is why the register will not be available for public inspection.

I think that we have dealt with the issue in the subsection but, given that the noble Lord and I are at one on this and he has raised a doubt, I shall take the issue away so that I can determine whether, and to what

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extent, an amendment is necessary or possible. I hope that, with that assurance, the noble Lord will feel able to withdraw his amendment.

Lord Haskel: I thank the Minister for that long explanation and in view of the fact that, as he said, we are at one on this, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 25 agreed to.

Clause 26 [Trustees not to be indemnified for fines or civil penalties]:

Lord Lucas moved Amendment No. 118M:

Page 14, line 9, at end insert:
("(4) Where a trustee of a trust scheme—
(a) is reimbursed, out of the assets of the scheme or in consequence of provision for his reimbursement made out of those assets, in respect of any of the matters referred to in subsection (1) (a) or (b), and
(b) knows (or has reasonable grounds to believe) that he has been reimbursed as mentioned in paragraph (a),
then, unless he has taken all such steps as are reasonable to secure that he is not so reimbursed, he is guilty of an offence.
(5) A person guilty of an offence under subsection (4) is liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum, and
(b) on conviction on indictment, to imprisonment, or a fine, or both.").

The noble Lord said: The amendment introduces a new criminal offence. Clause 26 places an overriding obligation on trustees not to use the assets of the scheme to reimburse any fine imposed on them by the courts, or civil penalties imposed on them by the Occupational Pensions Regulatory Authority.

Subsection (3) already provides that any trustee who does not take appropriate action to prevent such a reimbursement being made is liable to removal by the authority and/or to a civil penalty. However, we consider that that does not go far enough. We want to ensure that any trustee who breaches the provisions in Clause 26 for his own benefit can be prosecuted. And that is what subsection (4) of this amendment does. It provides that a trustee who is reimbursed out of the scheme assets, or out of provisions (for example, an insurance policy) paid for out of them, in respect of any matters referred to in subsection (1) (a) or (b) is guilty of an offence if, first, he knows (or has reasonable cause to believe) that he has been so reimbursed; and, secondly, he does not take all reasonable steps to secure that he is not so reimbursed.

The new subsection (5) of the amendment sets out the penalty that can be imposed upon a person convicted of an offence under subsection (4). On summary conviction, a person would be liable to a fine not exceeding £5,000. On conviction on indictment, a person would be liable to an unlimited fine, or a term of imprisonment not exceeding two years, or both. We believe the penalty set out here reflects the serious nature of the breach.

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Sanctions will not provide an effective deterrent to wrongdoing if the trustees are able to reimburse themselves from scheme assets for any financial penalties imposed upon them. People who breach the provisions in Clause 26 for their own benefit shall also be punished appropriately. I beg to move.

On Question, amendment agreed to.

Clause 26, as amended, agreed to.

Clause 27 [Decisions by majority]:

Baroness Dean of Thornton-le-Fylde moved Amendment No. 118N:

Page 14, line 11, at beginning insert ("Except where otherwise provided in the trust deed, or in the Memorandum and Articles in the case of a trust company,").

The noble Baroness said: I shall speak also to Amendments Nos. 118P, 118Q, 118R, 120B and 120C. The amendments tidy up the area relating to the functions of trustees and decisions being taken by a majority. Amendment No. 118N clearly covers trustees' responsibilities, in that trustees, or the memorandum and articles in the case of a trust company, cannot be overridden by a decision of the trustees of a scheme to do just that and move to a majority decision.

Amendment No. 118P removes the words "and only the trustees", because clearly there must be occasions when the authority has the right to step in. The words, "from time to time" are covered by Amendment No. 118Q. We do not believe that those words are necessary. If the Minister feels that they are, we should like him to tell us why. Why include the words "from time to time", because that is very open ended? It is not specific. That feeds through to the reasoning behind Amendment No. 118R. I have nicknamed subsection (2) (b) "ad hocery" because it may have effect for a specific occasion or for a class of occasion, and if neither of those do it can have effect generally. That is wrong. If the Minister opposes the deletion of paragraph (b) will he tell us why it has to be in? It leaves again an open-ended situation and decisions made by a majority of trustees.

Amendment No. 120B introduces again "with the consent of the Authority". Amendment No. 120C is important because it covers that a determination under the clause:

    "shall override anything to the contrary in any rule of law, enactment, instrument or agreement".

The words in the amendment make it clear that decisions of the trustees cannot override anything in law, enactment, instrument or agreement. I beg to move.

8.15 p.m.

Lord Mackay of Ardbrecknish: As the noble Baroness explained, the amendments seek to overturn the main thrust of Clause 27, which is that the trustees of a scheme can decide whether or not the determinations of the board should be by majority. Under current trust law, decisions of the trustees must be unanimous, unless otherwise provided in the trust rules.

Like the Pension Law Review Committee, we believe that the rule of unanimity is no longer suitable in the present day and that, in fact, most schemes already provide in their rules for majority decisions. We therefore propose to legislate so that trustees have the

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right to determine the appropriate voting rule for their scheme, despite what scheme rules may say. The trustees can determine for themselves whether voting should be unanimous or by majority, and, if by majority, they can also decide that certain specified decisions should be unanimous. I believe that answers one of the points raised by Amendment No. 118R.

Taken together, the amendments would mean that, if scheme rules already provide for unanimous decisions, schemes would be able to change that position only with the consent of the authority.

The noble Baroness asked me about the phrase "from time to time". Not being a lawyer, I have some difficulty with this, but I suspect that the phrase is used so that it is not a once-and-for-all decision. That is my answer to that amendment.

The whole basis of Clause 27, and indeed many of the other provisions in Part I, is that schemes' trustees are the ones responsible for running schemes. They are there to run their own schemes. It is not necessary to involve the authority in matters such as this. If the trustees believe they should be dealing with decisions on a majority basis, it should be for them to decide that for themselves. Of course all that is subject to the minimum requirements which outline what a majority means.

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